3228592 - Closed Petty Cash Being Considered in the Foreign Currency Remeasurement Run for Cash

You have closed a petty cash in foreign currency, however the system still considers it in the Foreign Currency Remeasurement run for Cash. You expect that the run should not remeasure the petty cash since it has been closed.

SAP Business ByDesign.

1. Go to Payment Management work center.
2. Go to Foreign Currency Remeasurement Runs view.
3. Open the relevant run.
4. Go to Remeasured Balances tab.
5. Refer to G/L Account 12345 and see that there is either a Gain or Loss being posted.

G/L Account 12345 refers to a Cash Account for Petty Cash XYZ, which has a zero balance and it is already closed. Due to which you do not expect it to be remeasured.

There were transactions posted in foreign currency related to this Petty Cash. The exchange rate from transaction currency to company currency fluctuated in between the transactions dates and Foreign Currency Remeasurement run date, due to which a posting related to a Gain or Loss of exchange rate for this transaction is required, but was not done (or it was automatically reversed due to the settings for Foreign Currency Remeasurement run for Cash). Therefore, the petty cash closed with Zero balance in transaction currency but non-zero balance in company currency due to such exchange rate differences that were not posted.

To analyze this in further details, you can proceed as follows:

1. Open the G/L Account Line items report.
2. Add all the mandatory and relevant selection parameters.
• Include G/L Account 12345
• Include ALL accounting period/fiscal year, from the beginning until the period/year for which the run is being executed.
3. Remove the Journal Entry Items characteristic to optimize performance.
4. Bring the Bank Account / Petty Cash ID characteristic to the rows.
5. Bring the Balance Company Currency and Balance Transaction Currency key figures to the column.
6. Run the report.
7. Refer to the Bank Account / Petty Cash ID characteristic and ensure that all postings relate to the same petty cash in question related to account 12345. If not, filter it accordingly.

As an example, lets consider Transaction Currency as INR and Company Currency as JPY.

8. Sum the amounts of each column (Balance in Company and Transaction Currency) to have an overview of the balances as a whole for the petty cash. This should match with the amounts in the Foreign Currency Remeasurement Run (Remeasured Balances tab) as follows:
• Sum of all Balance Amounts column = 0,00 INR
• Sum of Historic Valuation Amount column = -600 JPY

The Sum of Historic Valuation Amount is the continuous cumulation of ALL payment transactions in company currency for the exchange rate pair in the cash location (petty cash or bank account) from inception to period for which the run is executed.
The Sum of all Balance Amounts column refers to balance in the petty cash or, in case of a bank account, refers to the closing balance of the last posted bank statement for this bank account.

9. Having the data shown in the report as above, you can take one Journal Entry for analysis. See example below: 

Assuming you have a Journal Entry for a Cash Transfer of 30,000.00 INR posted on 31.12.2019.  At that time, exchange rate from INR to JPY was 1.53 (see journal entry). Therefore, 30,000.00 INR = 45,900.00 JPY. For the accounting period/year that you are executing the Foreign Currency Remeasurement Run, the exchange rate from INR to JPY is 1.51.  If you revaluate this transaction at current rate, you have 30,000.00 INR = 45,300.00 JPY.

Therefore, 45,900.00 JPY - 45,300.00 JPY = 600 JPY, which is considered a loss due to exchange rate fluctuation. Such exchange rate differences are being correctly identified by the Foreign Currency Remeasurement and needs to be posted to a differences account. This is what the Foreign Currency Remeasurement Run recognizes and posts at the end of the period. Be aware that since the run in your system may be set up to reverse the posting at the next period start, the differences are carried over through time.

For more details, please refer to help document Foreign Currency Remeasurement.

Since the exchange rate difference has not been posted yet, the system keeps raising the difference in the Foreign Currency Remeasurement Run. You must execute the run in update mode to post the gains/losses (without reversing it in the subsequent period) or adjust the amounts manually via Journal Entry Voucher to mimic the postings that the Foreign Currency Remeasurement run would do.

At the end, G/L Account 12345 must be debited or credited (depending if there is a gain or loss to be posted) so that the balance in company currency becomes zero. Once that is achieved, the petty cash account is no longer considered by the run.

The settings that define whether or not the Foreign Currency Remeasurement run postings are reversed in the subsequent period are maintained in business configuration, as follows:

1. Go to Business Configuration work center.
2. Go to Implementation Projects view.
3. Open activity list.
4. Open activity Foreign Currency Remeasurement Methods for Cash.
5. Click Assign remeasurement method to accounting principle.
6. Select the respective accounting principle.
7. Go to tab Use for Cash
8. Refer to column No Subsequent Reversal Posting. 

If this checkbox is flagged for the respective accounting period, the foreign currency remeasurement run postings are not reversed in the subsequent period and differences are not carried over through time.

Observations (in case of manual journal entry voucher postings):

Journal Entry Type 00083 - Manual Entry for Cash
Business Transaction Type 636 - Manual Write-Up/Write-Down for Cash

If you decide to manually post the differences, be aware of different combinations of Profit Center and Segments that can have. Due to that, separate Journal Entry Vouchers may be required to post all the differences. It can happen that some Journal Entry Vouchers will Credit the G/L Account 12345 while others will debit this account considering each combination of Segment and Profit Center to bring the account balance to zero in company currency. Note that the balance is checked against the G/L Account as a whole (for the specific cash location), which may raise some errors in the process of crediting/debiting this account:

For example, G/L Account 12345 has -600 JPY balance in company currency. However, the differences must be allocated to different Profit Center and Segment combinations:

• Debit of 1200 JPY to Profit Center and Segment AAA.
• Credit of 600 JPY to Profit Center and Segment BBB.

If you start by the credit postings, since you have a negative balance in G/L Account 12345, no credit postings would be allowed by the system. The following error would be raised: 'No credit amount possible for account 12345, cash location XYZ'. Therefore, you need to start by posting the debit amounts to increase the G/L Account balance and make it positive, to then post the credit differences.

However, this lead to a subsequent problem: There exists a system logic to check if a given posting (in the same journal entry voucher) would make the account balance from negative to positive. If yes, an error is raised: Amount <amount> too high; only <difference> open for cash location <ID>, set of books <ID>.

To overcome that, you need to start by the debit postings and split the amounts to first make the G/L Account from negative to zero instead of from negative to positive in the same document. Considering the above example, the following would be the required postings:

• For the debit of 1200 JPY to Profit Center and Segment AAA: 
• First Journal Entry Voucher debit 600 JPY to G/L Account 12345 with Profit  Center and Segment AAA -> G/L Account balance becomes 0,00 JPY
• Second Journal Entry Voucher debit the remaining 600 JPY (1200 - 600) to G/L Account 12345 with Profit  Center and Segment AAA -> G/L Account balance becomes 600 JPY

• For the credit of 600 JPY to Profit Center and Segment BBB:
• Journal Entry Voucher credit 600 JPY to G/L Account 12345 with Profit  Center and Segment BBB -> G/L Account balance becomes 0,00 JPY

This sequence of postings overcomes both the above mentioned errors in case of manual adjustments via journal entry vouchers.

As always, it is highly recommended to test the scenario and postings as a whole in your test environment and evaluate the same with your accounting/finance team before applying the same in production.

Foreign Currency Remeasurement Run. Cash. Differences. Exchange Rate. , KBA , AP-PAY , Payment Processing , How To