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DIFFERENT TYPES OF CURRENCIES
TRANSACTION CURRENCY -
Currency in which the transaction is denominated.
FUNCTIONAL CURRENCY - Currency in which company conducts its
business. E.g., some Latin American companies might conduct business in USD because of high inflation rates.
LOCAL
CURRENCY (currency type 10) - normally it is the functional currency of the country where the company code is registered;
legal/statutory currency e.g., CAD for Canadian company
PARALLEL CURRENCY - Not normally activated. If
functional currency is not same as statutory currency, parallel currency can be activated. E.g., High inflation currency
where there is a need to see both currencies at the transaction level. Defined at the company code. Company will have local
currency plus two parallel currencies.
GROUP CURRENCY (currency type 30) - currency defined in client master;
normally this is also the consolidation reporting currency for the group; If using Group Currency in FI it is advised to use
Group currency in CO as well.
THE FI WORLD
In the Financial Accounting module, there are
basically three types of currencies: Transaction, Local and Parallel.
TRANSACTION - this is the
document currency. In cases where the exchange rate is not defined, the exchange rate is picked up from the
table.
LOCAL CURRENCY - This is the company code currency.
PARALLEL CURRENCY - In addition to
the local currency, you have the option of defining two parallel currency that can be used for reporting. This may be used
in cases where a company is in a country where inflation is rampant and there is a need to report in hard currency e.g.,
Mexico company can have MXN as local currency, USD (hard currency) as 2nd parallel currency and CAD (group currency) as third
parallel currency
THE CO WORLD
In the Controlling module, in addition to the transaction
currency you can have three other types of currencies - Controlling Area, Company Code, and Cost Object (Cost center, profit
center etc.)
CONTROLLING AREA CURRENCY - two types can be used: controlling area currency or group currency
(Cost Center, Profit Center, and Internal Orders)
COMPANY CODE CURRENCY - 1st local currency defined in
company (not parallel currency) - all CO modules
COST OBJECT CURRENCY - currency of the cost object. A cost
object is a collection bucket which can be a cost center, internal order, WBS element, PA segment or Network etc.
TRANSACTION CURRENCY - same definition as FI
Here are the two rules for currency definitions in the
Controlling module.
- If Controlling Area Currency = Company Code Currency then Cost Object Currency is freely
defined
- If Controlling Area Currency DOES NOT EQUAL Company Code Currency then Cost Object Currency = Company Code
Currency
THE SEM-BCS WORLD
The Business Consolidation module of SEM has four different
definitions of currency.
TRANSACTION CURRENCY - same as FI
CONSOLIDATION UNIT (CU) CURRENCY - to
define currency in which unit submits data to the group for consolidation purposes.
CONSOLIDATION GROUP (CG)
CURRENCY - defined in Consolidation Group; Consolidation Group is linked to a Consolidation Ledger which stores the
consolidated report currency
CONSOLIDATION LEDGER CURRENCY - defined in the Consolidation Ledger where it
stores the Consolidation reporting currency; 1 currency per ledger.