How to set up an additional reporting currency in Microsoft Dynamics 365 Business Central and NAV

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BDO

This post focuses on how to set up an additional reporting currency in Microsoft Dynamics 365 Business Central (D365BC) and NAV.

Using the Additional Reporting Currency feature helps:

  • show more accurate balances/net changes in the local (LCY) and/or foreign currency ($) on the chart of accounts page; and
  • show more accurate amounts in LCY and/or $ on financial reports

Using the Additional Reporting Currency function can also save time and increase precision of reporting for companies that use foreign currencies. This is achieved by automating some processes required to obtain amounts in a currency other than LCY or to align the amount in $ with LCY.

Note that companies that use consolidation entities require a separate setup that goes beyond the scope of this post.

 

In order to make the additional reporting currency function work, it’s necessary to set up the following four areas:

  1. Currency Card
  2. G/L Account Card
  3. General Ledger Setup
  4. Adjust Exchange Rate function (batch job)

The first component needed is the Currencies list. You can use the search box in D365BC and NAV or to go to Departments> Administration> Lists> Currencies in NAV. Next, the system requires the Currency card that is to be set up as an Additional Reporting Currency. With the out-of-the-box functionality, it’s only possible to set up and use one Additional Reporting Currency at a time. The four fields the system needs on this card are:

  • Realized G/L Gains Account
  • Realized G/L Losses Account
  • Residual Gains Account
  • Residual Losses Account

These accounts are required for the system to be able to do the background posting if necessary. Screenshot 1 below shows these fields:

Screenshot 1: Currency Card

 

Above, Screenshot 1 shows the list, card, and the FastTab that are required.

Next, it’s necessary to go to the Chart of Accounts list (use the search box in D365BC and NAV or go to Departments> Financial Management> General Ledger> Chart of Accounts in NAV).

On a G/L Account Card, under the Reporting FastTab, the following three options available:

Screenshot 2: G/L Account Card

No Adjustment—If this option is selected when the Adjust Exchange Rate batch job is run (even if the Adjust G/L Accounts for Add.-Reporting Currency option is selected), the system will not update any amounts on these G/L Accounts.

  • Adjust Amount—If this option is selected when the Adjust Exchange Rate batch job is run, the system will only adjust the LCY amounts on these G/L Accounts.
  • Adjust Additional-Currency Amount—If this option is selected when you run the Adjust Exchange Rate batch job, the system will only adjust the $ amounts on these G/L Accounts.

Depending on a particular company’s needs, G/L Account purpose, and type, different options can be useful. Users may find the third option most useful in most cases. The Adjust Amount and Adjust Additional-Currency Amount options should only be used on G/L Accounts posting types. Using them on an End-Total will cause an error upon running the Adjust Exchange Rate batch job.

Next, the General Ledger Setup needs to be updated. This can be accessed by typing General Ledger Setup in the search box (D365BC and NAV) or by going to Departments> Financial Management> Setup> Administration> General Ledger Setup in the Departments (NAV).

The field of interest here is Additional Reporting Currency, which is located on the Reporting FastTab:

Screenshot 3: General Ledger Setup page

 

Above, Screenshot 3 shows the field to be filled out with the currency code that will be the company’s Additional Reporting Currency.

When a currency is selected, the system displays a warning message. It’s the responsibility of the user to make sure that benefits of taking this step outweigh any negative outcome (if any). Essentially, the system warns that:

  1. If another Additional Reporting Currency has been used before, general ledger (GL) entries will be posted in the new one from now on; and
  2. Analysis View Reports (analysis by dimensions) must be updated the next time a user needs to run them.

If the user accepts, the system will automatically open a dialogue window to run the function that recalculates already posted GL entries in the newly selected Additional Reporting Currency.

Screenshot 4 below shows the warning message and the dialogue window:

Screenshot 4: Additional Reporting Currency warning message and job batch

The three fields that are required to be filled out in this dialogue window are:

  • Additional Reporting Currency (already selected based on the selection on the General Ledger Setup)
  • Document No.—This is the description that will help users identify the GL entries that will be the result of running this batch job
  • Retained Earnings Acc.

The batch job above will use the most up-to-date rates available on the Currencies list (use the Rates button in the ribbon).

This completes the setup of the Additional Reporting Currency function. The only remaining point concerns maintenance. The next time the Additional Currency Exchange Rates need to be updated, it’s necessary to go to the Currencies list and click on the Adjust Exchange Rates button in the ribbon as shown in Screenshot 5 below:

Screenshot 5: Adjust Exchange Rate batch job

 

Often, companies update Additional Currency Exchange Rates together with customer, vendor, and bank account rates. However, it can also be done separately if necessary. What’s important is that the Adjust G/L Accounts for Add.-Reporting Currency field must be selected. The Document No. (this is the description that the system will assign to the related GL entries) and other fields can be adjusted as required based on the company’s needs.

In summary, setting up an Additional Reporting Currency in the system helps save time and improves the precision of financial reporting.

The objective of the IT Solutions team at BDO Canada LLP is to help companies set up and effectively use Additional Reporting Currency and other functions in Microsoft Dynamics 365 Business Central or NAV.

For more information, contact us.

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