Budgeting and Reporting in Multiple Currencies

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Multi-currency reportingBudgeting, forecasting, and reporting with international entities can be tricky. Why? Currencies!

Converting the P&L and Balance Sheet using closing or average rate sounds easy - but don’t forget, you have to work out the cumulative translation adjustment too. Then you need some what-if analysis because the Euro rate you budgeted has increased or decreased materially.

That’s all hard in Excel, impossible in most reporting tools, but… CALUMO can do it!

I raise this because I was asked about consolidations and multi-currency issues just this week. Here is how we would handle it in CALUMO.

How is currency handled for reporting and planning in a foreign entity in CALUMO?

To handle foreign entities, your CALUMO data cube would include an Entity dimension. This dimension will consolidate your entities as desired. The Entity dimension holds both local and foreign entities along with a flag containing what the local currency is.

Actual data is stored in the foreign company’s local currency, and CALUMO translates it to any desired reporting currencies such as USD based on the entities flagged local rate. For example, when I look at an Income Statement for CALUMO Australia, it has a local currency flag of AUD, so when I select CALUMO Australia on the Income Statement and select the reporting currency as USD, the actuals are converted to USD. Currency rates are stored in a table that the Finance Team update at the end of the month or at budget and forecast times.

We also store our budget and forecast data in the local currency and CALUMO converts these automatically too. During the budget process, HQ will modify currency rates once the international entities have completed their budget to see the consolidated budget.

When currency rates change, results are instantly available. CALUMO automatically calculates the foreign currency translation adjustment for the cumulative translation adjustment account. Now that's very handy!

Elimination entities that allow for sub-consolidations within a consolidated group are often included in this dimension too. Even if they do not exist in a source ERP, CALUMO can be used to manage them.  We always recommend putting elimination entities in the ERP for simplicity if that's possible, but sometimes that's too hard so CALUMO just takes care of it.

So if your battling in Excel or any other reporting and budgeting tool with consolidations and multi-currency, it's time to try CALUMO.

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