In this chapter, you will learn about the foreign currency revaluation functionality in QAD Enterprise Applications. The chapter explains revaluation concepts and terms, revaluation setup, and revaluation transactions and related activities.

There are three types of currencies in QAD Enterprise Financials.

Due to the dual base currency concept in QAD Enterprise Applications, three currencies may appear on foreign currency transactions.

Transactions can be recorded in foreign or base currency.

All three amounts are stored in the database and can be displayed on reports.

There are two types of revaluation:

An exchange rate is defined by its type, valid from, and valid to date.

To ensure that a valid daily exchange rate is always available, the Valid To field lets you specify the validity end date of an exchange rate. This field is available for all exchange rate types. In addition, the Default Validity field lets you specify the default number of days that an exchange rate of a particular type is valid.

There are system exchange rate types and user-defined exchange rate types.

You must define an exchange rate for the system exchange rate type Accounting.

The statutory exchange rate type is used in currency conversions that use statutory currency. In domains that use a statutory currency, the system always looks for a statutory type exchange rate.

If the system cannot find an exchange rate for the relevant period, it can revert to using the accounting exchange rate, depending on the setting of the Fallback to Accounting field in Exchange Rate Type Create (26.3.1).

Only the system account and the revaluation account are used in the posting. However, for standard GL accounts, the source and revaluation accounts are the same, and the source account is also used in the posting.

To enable accounts to be revalued, you must configure currencies and revaluation parameters on the accounts, and then create a posting structure for revaluation postings.

Currency revaluation parameters can be set up at the level of the individual GL account. Whether a GL account can be revalued and the revaluation approach (with revaluation account or not) depends on the type of GL account.

The effect of revaluation on customer and supplier payment accounts depends on the payment instrument. If the payment instrument is direct debit (customer accounts only), the foreign currency transactions are performed using the accounting exchange rate for the direct debit date, and revaluation is not required. However, for drafts and post-dated checks denominated in a foreign currency, the payee must wait until the due date to collect the value. The value of the check or draft can vary from the date of issue until the due date, and is subject to revaluation.

Some standard GL accounts accept transactions in any currency, and are, subject to revaluation.

Bank and cash accounts can be denominated in a non-base currency, which must be expressed in the base currency of the entity.

Revaluation results must not be posted on the control account.

When the GL account type is a control account then a revaluation account must be identified. The result of the revaluation will be posted on the revaluation account.

Analytical method is limited to sub-account for this type of account.

The same set of accounts is used for transaction currency and statutory currency revaluation.

The revaluation account fields become enabled depending on the type of GL account selected.

You define the revaluation methods and rates for a source GL account in the Currency tab of Account Create. The tab lets you define both methods and rates for the revaluation of both the base currency and the statutory currency.

You can define the statutory currency revaluation method and rate independently of the base currency revaluation method and rate.

All types of analysis are supported for the source account. However, default values are required. For example, if the source GL account has cost center analysis, a default cost center must be specified in the GL account Analysis tab in order for the account to be revaluated.

You must define revaluation daybooks for each account type that is being revalued, and the daybook type must match the account type.

Only daybooks of the primary and secondary layers can be used, and the source and target layer types must be the same.

Multiple revaluation runs can be made during the same GL period.

When a revaluation posting has been created for a particular GL period, a subsequent revaluation posting for the same period reverses the existing posting. You cannot create revaluation postings that occur in correction periods, or create a reverse posting to occur in a correction period.

You can choose up to three source layers to be revaluated and the target layer to which the revaluation posting must be made. A subsequent revaluation that has the same target layer as a previous revaluation for the same GL period must also use the same source layers as the previous revaluation. Alternately, all the source layers must be different in the subsequent revaluation for the same GL period to prevent overlap.

If the target layer is the same and the source layers overlap, then an error message will be displayed, and you cannot save the revaluation posting.

See User Guide: QAD Financials for detailed information and examples on multiple revaluations in the same GL period.

Revaluation Simulate activity (25.21.1.1) identifies the revaluations to run for the GL periods and revaluation areas specified. You can also specify the source layers where the balances are calculated and the target layer where the revaluation will be posted when you run Revaluation Post.

The Revaluation Scope settings let you identify specific types of accounts for which to run the revaluation process; for example, customer or supplier payment or control accounts, or balance sheet accounts. The account types you select are displayed in the Revaluation Area column of the simulation grid when you click Apply to begin the simulation.

You can choose to revaluate relevant to the base currency, statutory currency, or both. The statutory currency revaluation will use the statutory exchange rate, unless you have specified a different revaluation rate in the currency settings in GL Account Create (25.3.13.1). When using the statutory exchange rate, you have the option to revert to using the accounting exchange rate if the statutory rate is unavailable. The fallback option is set in Exchange Rate Type Create (26.3.1).

The base currency revaluation and the statutory currency revaluation are not dependent. You can run the revaluations separately or together.

The simulation results are displayed in a hierarchical grid. You can drill down for more detail on individual items. The results are grouped by revaluation area, and by transaction currency or by transaction currency/sub-account combination if you defined sub-account analysis for the system accounts.

The results display the following information:

When you have completed the fields, click Save to save the revaluation.

Both Revaluation Simulate and the Revaluation report include all transactions in the revaluation scope. In addition, transactions that have no revaluation impact are included, that is, transactions where the revaluation difference is zero because the historical rate is the same as the revaluation rate.

By including all transactions in Revaluation Simulate and the Revaluation report, the system provides a complete reconciliation between the transaction amounts from before and after revaluation.

Revaluation Post is similar to Revaluation Simulate, but Revaluation Post activities update the GL. Use Revaluation Post (25.21.1.5) to post the revaluation differences to the relevant accounts.

You can only post a revaluation after you have saved it in Revaluation Simulate. Revaluation Post processes one or more of revaluation simulations, and creates the GL postings for them.

Select revaluations created using Revaluation Simulate for posting using the GL calendar year and GL period, revaluation number, layer, and revaluation scope items as search criteria. Click Add to add revaluations that match the criteria to the Posting grid.

In this exercise, you will:

Use entity 10USACO

In this exercise, you will: