Cognos Controller

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  • 1.  Currency translation P/L

    Posted Mon May 09, 2022 09:31 AM
    hi

    we are about to implement Cognos Controller and need to make a decision about monthly translation of the P/L or using YTD currency rates..
    Our advisors are telling us YTD is most widely used, but our preference would be monthly as YTD would be to inaccurate if there are large currency movements.
    Anyone that has experience with using monhtly translation? Anything we need to be aware of that can cause issues when using monthly translation?

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    Tor Olav Bye-Andersen
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  • 2.  RE: Currency translation P/L

    Posted Mon May 09, 2022 05:07 PM
    Hi Tor,

    We use monthly translation for the P&L. The only thing I would say you need to be aware of is if someone books something incorrectly to the P&L. For example if on intercompany account a value was booked against the wrong counterparty and then the following month the correct counterparty used, you will still see values for the original counterparty due to the movement in exchange rates. It is imperative when using monthly translation to ensure everything is booked correctly and any corrections made in the same month. We have been known to go back and correct previous months in order to eliminate errors going forward. Hope this makes sense.

    An example if for period 1 Company A has a balance with company B of USD 1000 and exchange rate of 1.5, then in Cognos Controller you would see GBP 667. In period 2 if the exchange rate moved to 1.2 and the P&L amount hadn't changed you would have GBP 833. However if the balance against Company B was zero as it should have been against company C you would now have a balance of USD 1000 GBP 833 with company C and a balance of GBP (166) with company B. Whereas the balance with company B should be zero.

    Happy to discuss further if helpful.

    Kind regards
    Natascja

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    Natascja Barsanti
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  • 3.  RE: Currency translation P/L

    Posted Tue May 10, 2022 03:14 AM
    Thank you for the input - I will follow up with our advisors to address this risk.

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    Tor Olav Bye-Andersen
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  • 4.  RE: Currency translation P/L

    Posted Tue May 10, 2022 03:31 AM
    This issue not only applies to IC movements and -corrections, but also to all values where you use the monhtly rate, as this method calculates the difference between YTD this period and YTD last period and mulitiplies with the rate. A non-linear development in the reported values will then cause incorrect values to be calculated, and also converted values were no local value exists (if one company should cease to report).

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    Khai Nguyen
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  • 5.  RE: Currency translation P/L

    Posted Tue May 10, 2022 03:54 AM
    Hi Khai,

    Long time no hear. Yes, totally agree it affects all accounts in the P&L and gave the intercompany as an example. In my example, there would be a value in in the intercompany P&L account against company B in group currency (converted value) of GBP 166 whilst USD would be 0 as nothing being reported but the translation is taking last month and using current rate. That's why when we spot this happening we go back and correct the original data.

    Look forward to seeing you at the next user conference.

    Thanks
    Natascja

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    Natascja Barsanti
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