Exchange Rates

Table of Contents

• 1 Exchange Rates in IDL Konsis
• 2 "Exchange Rates" Overview (WKZWKA)
• 2.1 Selection Options
• 2.2 Column Headers
• 2.3 Actions
• 3 Individual Application "Exchange Rate" (WKZWKAE)
• 3.1 Key Fields
• 3.2 Attributes
• 4 Exchange Rate Types
• 4.1 Exchange Rate Type 'E' (EMS Central Rate)
• 4.2 Exchange Rate Type 'M' (Average Rate)
• 4.3 Exchange Rate Type 'R' (Reversed Mean Exchange Rate)

1 Exchange Rates in IDL Konsis

As part of the consolidation of foreign subsidiaries, the exchange rate on the group currency is used to unify the currency unit. For this reason, exchange rates are specified in a uniform manner across the Group and therefore belong to the group of consolidated data (KONDAT).

WKZWKA displays the current overview of all exchange rates of all currency codes for the selected fact when it is called directly. This display/list can also be used as a complete verification for the securities.

When called up via the follow-up processing from the currency conversion application (WUM), the targeted selection is carried out immediately with the keys assigned there (currency, reference date, fact).

The conversion is commonly used:

• The euro central rate (E) since 1999 for group financial statements in EMS countries
• The official average rate at the time, which lies between the exchange rate (rate at which credit institutions buy foreign currency) and the exchange rate (rate at which credit institutions sell foreign currency); from 1999 only if the group financial statement has to be made in a non-EMS country, e.g. Switzerland, Great Britain or Denmark. The average prices of a period can be determined by issuing the prices at different points in time. These rates are officially determined and can be queried at the individual credit institutions (e.g. ECB). For non-freely convertible currencies, it may be more informative to use the exchange rate formed on so-called 'parallel markets' instead of the official exchange rate. For currency conversion in the group financial statement, it is essential with which temporal reference the respective balance sheet and income statement data of foreign subsidiaries is transferred to the group currency.

Against this background, the following distinctions can be made in principle:

• Closing rate: Exchange rate at the time of the balance sheet date (always applicable at the euro central rate)
• Historical course: Exchange rate at the time of procurement or manufacture of an asset (only for non-euro central rates)
• Course for the future: Course to be expected in the future

In IDL Konsis, depending on the conversion method, only the closing rates or the closing rates and the average rates are entered, which are used within the currency conversion for the conversion of the corresponding balance sheet and P&L accounts are used. The exchange rates shall be calculated per currency code (EER) using:

the exchange rate type

e.g. 'E' = Euro central rate of the EMS, 'R' = average rate (since 1999), 'M' = average rate (before 1999 notation)

the temporal reference

e.g. T=closing rate, P=currency rate average per period

the relevant reporting date

e.g. price based on 31/12/2019

Example: The closing rate for the closing date of 31 December 2001 is to be entered as the average rate of US dollars

This course is interpreted as a closing rate related to 12/31/2019. It should be noted that the exchange rates are to be entered on the fact that has been defined for the HBII/consolidation level, e.g. 'I4' here. In order to avoid the redundant maintenance of exchange rates on different data types, it is possible to define a reference data type for exchange rates in the FAC application per fact, which may be used.

The maintenance of the historical or certain predefined rates for selected facts/consolidated accounts is carried out directly via the individual transactions of the corresponding marking-up applications, e.g.

• CAPBEW = Capital transactions
• RUEBEW = Provision movements
• CURRENT VALUE = Fixed asset transactions
• GESGES = Shareholdings

2 "Exchange Rates" Overview (WKZWKA)

2.1 Selection Options

The following mandatory entry fields in the selection area are used to specify the courses to be displayed:

[Currency code]: Valid key, partial key+% or %

[Fact]: Valid key, partial key+% or %; if a reference data type for exchange rates is specified for the specified fact in the FAC application, the rates specified on the reference data type are (also) displayed.

[Exchange rate reference date]: Blank or valid date

Next selection options are available in the extended selection area:

[From exchange rate reference date]: Blank or valid date; in conjunction with. Exchange rate cut-off date A time interval can be specified from which all defined exchange rates are displayed

[Exchange rate type]: Blank, % or valid key

[Time off]: Blank or valid date

[Language]: Language for currency descriptions in the table different from the user’s standard language

[Explanation]: Blank = all, %=all with entry, *=all without entry

2.2 Column Headers

The abbreviated column headers for display fields only mean:

W: Exchange rate type

Z: Time reference

In the "Currency formula" column, the formula for converting the respective currency to the group currency with the displayed rates and factors is issued to check the correct notation.

2.3 Actions

The following applications can be accessed via the Action Selection dialog:

[WKZWKAE]: Exchange rates (individual record processing)

[Copy]: Mass copy for all previously marked exchange rates in one step to other keys e.g. other facts, foreign exchange rate type or reference dateWK.

[WKZ]: Currency code

[Adoption of exchange rates by the ECB]: If an internet connection is available, exchange rates can be called up directly by the ECB.

3 Individual Application "Exchange Rate" (WKZWKAE)

Clicking on the Insert symbol (star) or double-clicking on a table row takes you to the individual record application for entry or changing the Data.

3.1 Key Fields

The key fields are all mandatory.

[Currency Code]: No input field and must therefore be clearly specified in the selection area of the overview before entering a new record

[Fact]: Valid facts according to application FAC

[exchange rate type:s.u.

[Exchange rate reference date]: Date (usually Monthly, quarterly or annual financial statements for the final closing, other data also possible for special cases (deconsolidation)

[Time Reference]: 'SK' = closing rate, 'PDK' = currency rate average per period (since the last annual financial statement), 'MDK' = monthly average rate

3.2 Attributes

An exchange rate shall be provided for each of these keys. The exchange rate can have up to 9 decimal places and up to 6 decimal places. There are usually 6 significant digits.

If the exchange rate is less than 0.1, any 6 decimal places are no longer sufficient for a significant indication. This applies in particular to the exchange rate type 'M'. In this case, a 10-fold potential can be specified as a factor in the currency code (application WKZ). This factor is not taken into account for exchange rate types E and R.

The rate is always related to the group currency used for the period and facts. Exception: For exchange rate type 'E', the rate is always referred to the currency EUR. Doubts regarding the notation can be checked via the currency formula in the table.

4 Exchange Rate Types

IDL Konsis distinguishes between different exchange rate types for the currency conversion. On the one hand, these are given in the definition of the exchange rates (WKZWKA) and on the other hand as parameters for the currency conversion (WUM) in order to control which exchange rates are actually to be used.

4.1 Exchange Rate Type 'E' (EMS Central Rate)

The exchange rate type E primarily defines the rates that have been set as central rates within the EMS for the currencies participating in the euro area. However, 'E' rates can also be defined for other currencies if a distinction between the reporting date and the average rate is not desired or required, e.g. the rate 0.001 for the currency 'TEU' (1000 EURO).

'E' rates are always based on the currency 'EUR', i.e. independent of the current group currency. If the group currency is not equal to 'EUR', both country and group currency 'E' rates are maintained, as the conversion is then made via 'EUR'. For the currency 'EUR' no 'E' rate has to be maintained, it would always be = 1. The 'E' exchange rates are always entered without taking into account the factor specified in the currency master number (WKZ). Only closing rates are supported for the exchange rate type 'E'. The entry of average rates is therefore unnecessary. Although the 'E' rates are fixed, they must be maintained for each period and fact in which a conversion is to be made. An automatic carry forward is not supported.

The currency conversion is carried out using the 'E' courses according to the following formulas:

Conversion LC -> GC (WKZ-GC = 'EUR')

Value-GC = Value-LC (LC)

Conversion LC -> Value (WKZ-LC = 'EUR')

Value-meets * 'E' rate (accepted)

Conversion LC -> GC (otherwise)

Value-GC = Value LC / 'E' rate(LC) * 'E' rate(GC)

Conversion GC -> PC (WKZ-PC = 'EUR')

Value-PC = Value-GC / 'E' rate (GC)

Conversion GC -> (WKZ-pays = 'EUR')

Value-meets = Value-meets * 'E' rate(improves)

Conversion GC -> PC (otherwise)

Value PC = Value GC / 'E' rate (GC) * 'E' rate(PC)

4.2 Exchange Rate Type 'M' (Average Rate)

The exchange rate type 'M' defines the official mean exchange rates in the quotation, which was common until the introduction of the EURO. 'M' rates are always related to group currency. For the group currency itself, there is no need to maintain an 'M' rate; it would always be 1. The 'M' rates are always quoted taking into account the factor specified in the currency master (WKZ). This is necessary in order to allow the number of significant digits after the decimal point (maximum 6) to be adequately quoted for currencies with very low values. For the exchange rate type 'M', closing rates (time reference = 'T') and average rates (time reference = 'P') must always be used. Exception: The purely reporting-date exchange rate procedure (conversion procedure 'RST') is used.

The currency conversion is carried out using the 'M' courses according to the following formulas:

Conversion LC -> GC

Value GC = Value LC * 'M' exchange rate (LC) / factor(LC)

Conversion GC -> PC

Value PC = Value GC / 'M' price (PC) * factor(PC)

4.3 Exchange Rate Type 'R' (Reversed Mean Exchange Rate)

The exchange rate type 'R' defines the official mean exchange rates in the quotation, which has been common since the introduction of the EURO. 'R' rates are always related to group currency. For the group currency itself, there is no need to use an 'R' rate; it would always be 1. The 'R' rates are always entered without taking into account the factor specified in currency master data (WKZ). For the exchange rate type 'R', closing rates (time reference = 'T') and average rates (time reference = 'P') must always be used. Exception: The purely reporting-date exchange rate procedure (conversion procedure 'RST') is used. In contrast to the 'M' rates, the 'R' rates do not take into account the factor from WKZ.

Currency conversion is performed using the 'R' Rates according to the following formulae:

Conversion LC -> GC

Value GC = Value LC / 'R' Rate(LC)

Conversion GC -> PC

Wert-PW = Value PC = Value GC * 'R' Rate(PC)