Using Multiple Reporting Currencies (MRC) with Oracle PayablesTai EllisOracle Corporation

AbstractThis paper focuses on using Multiple ReportingCurrencies (MRC) with Oracle. This paper iswritten for intermediate to advanced OraclePayables/MRC users, it assumes that the readershave a thorough knowledge of navigating andsetting up an Oracle Payables application.

ScopeI. Overview of MRCII. Set of BooksIII. Conversion Rules & Exchange Rate

RelationshipIV. SetupV. Transaction Processing in PayablesVI. TroubleshootingVII. MRC TriggersVIII. MRC TablesIX. MRC Views

I. Overview of MRC

MRC, available in Release 11 only, allows youto report and maintain accounting records inmore than one functional currency by definingone or more reporting set of books andassociating them with your primary set of books.MRC is specifically intended for use byorganizations that must regularly report theirtransactions and financial results in multiplecurrencies, other than their primary functionalcurrency. Typically, you should consider usingMRC when:

1. You operate in a country whose unstablecurrency makes it unsuitable for managingyour business.

2. Your company is multinational, and youneed to report financial information in acommon functional currency other than thatof the transaction or your primary functionalcurrency.

3. You operate in a country that is part of theEuropean Monetary Union (EMU), and youare transitioning from your nationalcurrency to the Euro (EUR).

MRC also supports the Multiple OrganizationArchitecture and the use of Global AccountingEngine. It is fully integrated with OraclePayables, Receivables, Purchasing, Fixed Assets,General Ledger, Project Accounting, CashManagement (due to its relationship withPayables and Receivables), Cost Management(due to its relationship with Payables andReceivables), and Inventory (when you transferjournals into Oracle General Ledger).

II. Set of Books

Primary Set of BooksThe primary set of books is defined as being theset of books in which you record your day-to-daytransactions. You will record those transactionsin your primary functional currency, or thecurrency in which you transact most of yourbusiness and the one you use for legal reporting.

Reporting Set of BooksThe reporting set of books shows thetransactions from the primary set of books but inthe reporting functional currency. The reportingfunctional currency is the currency, other thanyour primary functional currency, for which youneed to report accounting data. You can assignup to eight reporting sets of books to a singleprimary set of books, and you can assign thesame reporting set of books to more than oneprimary set of books, provided they all have thesame calendar and chart of accounts. But, youcannot assign a primary set of books to anotherprimary set of books or to a reporting set ofbooks.

III. Conversion Rules & Exchange RateRelationship

As you enter transactions in Oracle Applicationsthat support MRC, they are converted, as needed,into your primary functional currency and eachof your reporting functional currencies, uponcommitting the transaction. However, therecords are not replicated until they aretransferred to Oracle General Ledger and the

Figure 1

TransactionCurrency

PrimaryCurrency

ReportingCurrency

Same

Reporting Conversion TypeMRC

Conversion

ConversionMRCConversion

TransactionCurrency

PrimaryCurrency

ReportingCurrency

User SpecifiedOrEMU Fixed

ReportingConversion

Type

Figure 2

journals are posted. Instead, limited data isstored in the MRC tables. The conversion isbased on the following business rules:

1. The primary functional currency transactionsare recorded in the same currency. Then, MRCconverts the transactions automatically to each ofyour reporting currencies.

2. Foreign currency transactionsare converted automatically to yourprimary set of books’ functionalcurrency. Then, MRC converts thetransactions to each of yourreporting currencies.

Reporting currency conversionrules differ depending on whetherthe exchange rate relationshipbetween a transaction and reportingcurrency is variable or fixed.

Variable Exchange RateRelationshipIn a variable exchange raterelationship, when the transactioncurrency is the same as the primarycurrency, no conversion is needed to yourprimary currency. When MRC converts thetransaction to your reporting currency, it uses theappropriate reporting conversion type youspecified for the application and operating unitthat originated the transaction (see Figure 1).

When the transaction currency differs from theprimary and reporting currencies, the applicationconverts the transaction to your primary currency

using a conversion rate type you specify (or therate type EMU Fixed when both of yourcurrencies are either an EMU currency or theEuro). MRC converts the transaction to yourreporting currency using the appropriatereporting conversion type you specified for theapplication and operating unit that originated thetransaction (see Figure 2).

Figure 3

Conversion

TransactionCurrency

PrimaryCurrency

ReportingCurrency

MRCConversion

User SpecifiedExchangeRate

ReportingConversion

Type

Example:You receive an invoice for 1,000.00Australian dollars (AUD) from an Australiansupplier. Your organization uses spot ratesto account for the invoice in your primary setof books, which is maintained in Canadiandollars (CAD). You use corporate exchangerates to convert amounts toU.S. dollars (USD) for reporting purposes.

Transaction currency: AUDPrimary currency: CADReporting Currency: USDSpot exchange rate (AUD to CAD): 0.9181Corporate exchange rate (AUD to USD):0.6409

This is how the invoice will be converted:Transaction amount: 1,000.00 AUDPrimary amount: 918.10 CAD(0.9181 * 1,000.00 AUD)Reporting amount: 640.90 USD(0.6409 * 1,000.00 AUD)

However, when you specify your owntransaction-to-primary currency conversion rate,your application converts the transaction to yourprimary currency using the rate you specify, andthe conversion rate type will be User in bothyour primary and reporting set of books. MRCthen converts the converted primary currencytransaction to your reporting currency using theappropriate reporting conversion type youspecified for the application and operating unitthat originated the transaction (see Figure 3).

Example:You receive an invoice for 1,000.00Australian dollars (AUD) from an Australiansupplier. Your contract with the supplier wasoriginally negotiated using prices inCanadian dollars. The exchange rate usedat the time of the agreement was 0.8950 (1Australian dollar = 0.8950 Canadian dollars).This is also the rate specified on the invoice.Your organization uses corporate exchangerates to convert amounts to U.S. dollars forreporting purposes.

Transaction currency: AUDPrimary currency: CADReporting Currency: USDUser–specified rate (AUD to CAD): 0.8950Corporate exchange rate (CAD to USD):0.6974

This is how the invoice will be converted:Transaction amount: 1,000.00 AUDPrimary amount: 895.00 CAD(0.8950 * 1,000.00 AUD)Reporting amount: 624.17 USD(0.6974 * 895.00 CAD)

Figure 4

TransactionCurrency

ReportingCurrency

PrimaryCurrency

Conversion

Same

User Specified Exchange Rate,EMU Fixed, orUser Specified Conversion Type

When the transaction and reporting currenciesare the same, no conversion is required. MRCuses the transaction amount as the reportingcurrency amount (see Figure 4).

Fixed Exchange Rate RelationshipFor fixed conversion rate relationships, whenboth your transaction and reporting currency isthe Euro or an EMU currency, MRC generallyuses the conversion rate type EMU Fixed when itconverts your transaction amount to yourreporting currency. However, if the transactionand reporting currency are the same then noconversion is necessary.

Example:In February 1999, after the transition periodto the Euro begins, you receive an invoicefor 1,000 Belgian francs (BEF). Your primaryset of books is still maintained in yournational currency units (Belgian francs), andyou are preparing to convert your operationsand financial accounting to the Euro. For thisreason, you have created a reporting set ofbooks with a reporting functional currency ofEuro and assigned it to your primary set ofbooks.

Transaction currency (EMU): BEFPrimary currency (EMU): BEFReporting Currency: EURFixed conversion factor (EUR to BEF):40.7048

This is how the invoice will be converted:Transaction amount: 1,000 BEFReporting amount: 24.57 EUR(1000 BEF /40.7048)

In Oracle Payables, as with all of yoursubledgers, transactions entered into yourprimary set of books are converted to thereporting functional currency at the time you

commit the entry (according to the definedconversion options), and you can report andinquire on journal entries and account balancesin both the primary and reporting set of books.

IV. Setup

Before you can begin using MRC with OraclePayables, you must do the following:

1. Multiple Reporting Currencies must beinstalled. See the Oracle ApplicationsInstallation Manual for details on installingMRC. In addition, you may also want toreview Chapter 5, ImplementationConsiderations, of Multiple ReportingCurrencies in Oracle Applications Release11 guide, to help you make some importantdecisions about the type of installation youare doing (and it’s requirements), the MRCstarting date, and initializing accountbalances in your reporting set of books.

2. Release 11 customers should apply the latestMRC Transactions Upgrade mini-pack (seeMetaLink News & Notes). Before receivingand applying an MRC mini-pack, you mustregister as an MRC customer. Please seeMetaLink News & Notes for the MRC link.

3. Complete all of the setup steps in Chapter 2of Multiple Reporting Currencies in OracleApplications Release 11 guide. Theyinclude:

• Enable or define primary set of books• Enable and/or define reporting

currencies• Define reporting sets of books• Assign reporting set of books to a

primary set of books• Define conversion options for each

application• Define Oracle General Ledger

conversion rules• Define reporting responsibilities• Assign reporting sets of books to

reporting sets of books to reportingresponsibilities

4. Apply the latest MRC micropack.

NOTE: After applying any patch, you must runMaintain MRC in ADADMIN. This processupdates the APPS_MRC schema. If this is notrun, you can corrupt your data. After runningMaintain MRC, run the verify script calledadvrfmrc.sql (located in $AD_TOP/admin/sql) tomake sure all triggers, packages, etc. are in syncbetween the APPS schema and the APPS_MRCschema.

V. Transaction Processing inPayables

With MRC set up, enabled, and all the necessarydaily rates entered, the first step to processingtransactions is to log into the Payablesresponsibility for the primary set of books andopen the Payables accounting period. (Note:While in Payables, you only open and closeperiods in your primary set of books, as MRCautomatically opens and closes periods in all ofthe associated reporting sets of books. In OracleGeneral Ledger, you need to open them in boththe primary and reporting sets of books.) Entertransactions into your primary set of books only.As you save those transactions, the enteredtransaction amounts are converted to the primaryfunctional currency. Entered transactionsamounts are then converted to each associatedreporting currency and entered into the reportingset of books.

NOTE: AutoRate, an option that allows you topostpone the specification of an exchange rateuntil the time of invoice approval, is notsupported for the reporting sets of books.Therefore, all Oracle General Ledger daily rates

necessary for converting to the reportingcurrencies must be defined in Oracle GeneralLedger prior to invoice entry. In addition, theRequired Exchange Rate Entry option in theCurrency alternate region of Payables Optionsonly applies to the primary set of books.

Next you need to run the Payables Transfer toGL in both the primary set of books and thereporting set of books to keep the data in sync.In addition, you cannot close your PayablesAccounting period until you have posted alloutstanding transactions to Oracle Ledger in bothyour primary and associated reporting sets ofbooks.

You can report and inquire on journal entries andaccount balances in both your primary andreporting sets of books. From each associatedreporting responsibility, you can view and reporton the transactions you entered in both thetransaction currency and the correspondingreporting functional currency only. All reportsthat are available for the reporting set of bookscome seeded with MRC. Additional or customreports will not work with the reporting set ofbooks responsibility and should not be added tothe reports group for that responsibility.

When the period is complete, close the APperiod in the primary set of books only. (InPayables, you only open and close periods inyour primary set of books, as MRCautomatically opens and closes periods in all ofthe associated reporting sets of books. In OracleGeneral Ledger, you need to open them in boththe primary and reporting sets of books.)

VI. Troubleshooting

1. Problem: When closing a period in AP, youreceive the following error:

gltpsau: there are unposted transactions forcurrency <currency code of reporting set ofbooks>

Solution: This error occurs when thetransactions are out of sync between the primaryset of books and the reporting set of books. Toget them in sync, make sure that the PayablesTransfer to GL has been run for both the primaryset of books and the reporting set of books.

MRC Tables Payables TablesAP_MC_CHECKS AP_CHECKS_ALLAP_MC_INVOICES AP_INVOICES_ALLAP_MC_INVOICE_DISTS AP_INVOICE_DISTRIBUTIONS_ALLAP_MC_INVOICE_PAYMENTS AP_INVOICE_PAYMENTS_ALLAP_MC_PAYMENT_DISTS_ALL AP_PAYMENT_DISTRIBUTIONS_ALLAP_MC_RECON_DISTS_ALL AP_RECON_DISTRIBUTIONS_ALL

Note: Bug 931564 suggests that there may be anissue with running the Payables Transfer to GLfrom the reporting set of books for somecustomers. The problem occurs when the Set ofBooks Name in the parameters for this processpoints to the set of books for the primary set ofbooks instead of the reporting set of books.Thus, the reporting set of books’ transactionsnever get transferred to GL.

If this is the case, the first thing that you need tocheck is that the reporting responsibility is set upcorrectly and the reporting set of books has beenassigned to the correct reporting responsibility,as noted in the Multiple Reporting Currencies inOracle Applications Release 11 guide (pages 2-19 and 2-21 respectively).

If both of those are set up correctly, try runningthe following script:

Select oracle_idFrom fnd_oracle_useridWhere oracle_username = 'APPS_MRC';

Select oracle_idFrom fnd_data_group_unitsWhere data_group_id = -99;

If the oracle id’s are not the same, then you needto update the oracle id in fnd_data_group_unitsto match the one in fnd_oracle_userid. Youshould then be able to run the Payables Transferto GL in the reporting set of books.

2. Problem: After applying a patch, youreceive errors about triggers when you enterresponsibilities or open forms.Solution: After applying any patch, youmust run Maintain MRC in ADADMIN.This process updates the APPS_MRCschema. If this is not run, you can corruptyour data. After running Maintain MRC,run the verify script called advrfmrc.sql(located in $AD_TOP/admin/sql) to makesure all triggers, packages, etc. are in syncbetween the APPS schema and theAPPS_MRC schema.

VII. MRC Triggers

The following is a list of the Payables triggersused by MRC:

AP_MRC_CHECKS_BIUDAP_MRC_INVOICES_BIUDAP_MRC_INVOICE_DISTS_BIUDAP_MRC_INVOICE_DISTS_IIUDAP_MRC_INVOICE_PAYMENTS_BIDAP_MRC_PAYMENT_DISTS_BIDAP_MRC_RECON_DISTS_BUID

Running Maintain MRC in ADADMIN updatesthe APPS_MRC schema to put it in sync withthe APPS schema. If they are not in sync, youcan significantly corrupt your data. In addition,you can run the verify script called advrfmrc.sql(located in $AD_TOP/admin/sql) to make sureall triggers, packages, etc. are in sync betweenthe APPS schema and the APPS_MRC schema.

VIII. MRC Tables used by OraclePayables

The following are the tables used by MRC forthe Payables transactions entered into thereporting sets of books. Each correspondingPayables table, which is used for the transactionsentered in the primary set of books, is also listed.

IX. MRC Views used by OraclesPayables

The following is a list of views that Payablesuses to support MRC.

AP_CHECKS_ALL_MRC_VAP_CHECKS_MRC_VAP_INVOICES_ALL_MRC_VAP_INVOICES_MRC_VAP_INVOICE_DISTS_ALL_MRC_VAP_INVOICE_DISTS_MRC_VAP_INVOICE_PAYMENTS_ALL_MRC_VAP_INVOICE_PAYMENTS_MRC_VAP_INV_DISTS_POST_MRC_VAP_INV_PAYMENTS_POST_MRC_VAP_PAYMENT_DISTS_ALL_MRC_VAP_PAYMENT_DISTS_MRC_VAP_RECON_DISTS_ALL_MRC_VAP_RECON_DISTS_MRC_VAP_SYSTEM_PARAMETERS_MRC_VAP_SYSTEM_PARAMS_ALL_MRC_VFINANCIALS_SYSTEM_PARAMS_MRC_VFIN_SYSTEM_PARAMS_ALL_MRC_V

These views can replace the correspondingtransaction tables but retrieve currency-sensitiveinformation expressed in the reporting currencyrather than in the functional currency for theassociated set of books. When you access atransaction table from APPS_MRC schema, anMRC synonym redirects your query to thecorresponding MRC view. This MRC viewensures you retrieve currency amounts expressedin the currency associated with the reporting setof books.

References:For more information on MRC, see MetaLinkNews & Notes.

Multiple Reporting Currencies in OracleApplications Release 11.

Oracle Applications Installation Manual.

About the AuthorTai Ellis is a Technical Analyst for the OraclePayables support team in Orlando, FL. She has2 years of experience supporting OracleApplications.