Multiple exchange rates for consolidating entities

In continuation to my earlier posts on consolidation Financial accounts in AX, this post is to highlight how AX allows multiple exchange rate types and exchange rates.

While consolidating data from companies from different regions (countries) around the world, due to a local business practices and requirements the exchange rates may vary for different subsidiaries although they belong to the same umbrella.

Below is an example of how to handle such a scenario as explained below. I am using the AX Demo data for the purpose of Consolidation.

S.No	Parent Company	Subsidiaries for Consolidation	Accounting Currency
1	GLCO		USD
2		USMF	USD
3		GBSI	GBP

There is no currency conversion required from USMF to GLCO since both these currencies are in “USD”. Now for the subsidiary “GBSI”, the accounting currency is “GBP” and hence it requires conversion to “USD”.

AX provides options for the users to select the Exchange rate type for direct conversion into consolidation company. Further the users may also choose different exchange rate types for different ledger accounts. 

In my case, I wish to choose “Average” exchange rate type for conversion for Main Account types: “Balance Sheet”, “Asset” & “Liability” and “Default” exchange rate type for conversion for main account types: “Profit & Loss”, “Revenue” & “Expense”.

Navigate to Consolidations > Consolidate Online:

Enter the Basic criteria as below:

 

Select the Legal entities for consolidation:

 

Go to Currency Translation Tab and enter the following:

•  For USMF, since the accounting currency is same “USD”, just select all accounts. Note that system is not allowing user to select the fields highlighted 
   
  
  
  
  
• ·        For GBSI, select the accounts from 110110 to 399999 (Balance Sheet, Asset, Liability & Equity accounts) note that that Exchange rate type field has now become mandatory
  
  
  
  
  
  •  Select the Exchange rate type as “Average”
  • The Apply exchange rate from field provides 3 options to user
  o   Consolidation date: This takes the exchange rate as on consolidation date
  o   Transaction date: This takes the exchange rate as per the actual transaction date in the source system
  o   User defined rate: This option enables user to provide a custom exchange rate
  
  
   
  
  
  
  
  • For our example, I will proceed with “Consolidation date” as is the norm
  • To continue further, create “New” and select main accounts from “401100” to “899999” (Revenue, Expense, Profit& Loss accounts).
  • Choose the Exchange rate type as “Default”
  
  
   
  This is it, once the rest of the parameters are set as per requirements, click “OK” to complete the consolidation.
   
  
  

Global General Journals – Enter journals in multiple LE's simultaneously in Dynamics AX

Very often most of the Dynamics AX implementations include implementation of multiple legal entities. The accountants need to create and post General Journals in multiple companies and this pretty often requires the users to juggle between companies (Select the company in which Journal needs to be posted and then continue with making transactions).

This is a very common scenario and kills the productivity of the accountant. Many of the accountants are very fast in General Journals entry and posting. Indeed, we require them to be fast, if our accountants are not that fast then the whole organization’s productivity is lost. Accounting is an essential back office task that needs to be productive. What they need is a system aided function where the accounting process is aided to improve productivity.

Here comes a brand new feature in with the new AX that alleviates the accounting users of this problem aiding them in better performing their tasks

“Global General Journals”

 So how does these Global General Journals work? Let us navigate and see it for ourselves:

Go to General ledger > Journal entries > Global general journals

 

In below screenshot observe that the Global general journals form has the Company as the first column (highlighted in Red). Also observe the Company that I am in is USMF in the Top right corner (Highlighted in yellow)

Now I want to create a new Journal in USPI company. I click on New (Alt+N) and enter the company as USPI, Journal name in the Dialog Box and click Ok.

This creates a new General Journal in USPI company with JBN# 00137 and continue with rest of General journal info.

Click on Lines to enter vouchers. Now if you observe the Journal voucher, the company has been updated to USPI (Highlighted in yellow)

 You can now complete the journal voucher and proceed for posting as a normal journal voucher in the USPI company.

Main account mask in Chart of Accounts - Microsoft Dynamics AX

Main Account mask, what is this? How is this helpful? These are some regular questions that linger around when we see this field in the Chart of Accounts form on Microsoft Dynamics AX.

Let me throw some light on it. While creating a number sequence we often configure the segments. We specify the segment as AlphaNumeric and provide a value as #####. The 5 hashes indicate that there are 5 running numbers. Quite often we also find && which indicates that there are 2 alphabets in the Number sequence segment.

 # - indicates a number

& - indicates an alphabet

Main Account mask is similar to the segments in a number sequence (except that it doesn’t automatically generate numbering like number sequence) and is used for validating the Main Account code assigned against the Mask specified in the Chart of Account and if a Main account code doesn’t match the Masking guidelines, AX will throw an error indicating mismatch in the masking guidelines.

For Example:

The CFO advises all the finance team to maintain the Ledger accounts (Main accounts) to have a account code that starts with the type of main account (represented by first character) continued with 5 digits.

This can be done by keeping the Main account mask as &##### (as below)

If the Main account code does not follow this protocol while creating a main account, then system throws error as below:

The correct Main account code to be affixed is as shown in below screen:

 

In the above A is an alphabet for & (representing the Assets), 11001 are the numerical code for #####. Hence it is treated as a correct combination for Main account code

Physical Vs. Financial Inventory transactions in AX 2012

Many of the AX community  often wonder what could be the difference between Physical & Financial transactions and when does the differentiation occurs and/or what sense does it make to have physical inventory transactions in books. In this article below, I tried to show the differences between Physical & Financial Inventory and the necessity of having Physical inventory on the books.

Physical inventory transactions occur when the goods are actually picked up or moved from within the company. The goods may have moved out as part of sales commitment or lined up for production requirements, the goods have been received from the vendor at the warehouse.

Normally during the Physical Inventory transactions, we only create an accrued liability or accrued asset and the transaction is not complete fully. This is done to recognize a transaction of inventory movement is in the process.

For Example: Product Receipt of PO, Packing Slip for a Sales order or a Picking list for production.

Financial inventory transactions occur when a PO or SO is invoiced and a Production Order is completed, when a financial Inventory transaction occurs, the same physical transaction is updated by AX and is treated as one single transaction that is complete in all respects.

Previous accruals, if any (done at the time Physical inventory transaction) shall be reversed and the final revenue or expense/asset transaction is posted.

is the Physical Inventory required?

Many legal entities that implement AX have larger workplaces spread across multiple regions. a purchase or a sale transaction normally spreads across multiple period.

For Example: A purchase order that was initiated on 15th June, the goods receipt is taken place on 30th June and the invoice was received and posted on 4th July.

The books are normally closed on a monthly basis, in the above case the inventory has already been received in our premises, but if the physical inventory is not recorded the inventory counting exercise cannot be properly carried out. If the Physical inventory is recorded, the system shows accuracy of inventory on hand for the counting exercise to be smooth.

A thumb rule that always needs to be noted is that 

"A financial inventory transaction will have a physical inventory transaction posted,

 but 

a Physical inventory transaction may not have a financial inventory transaction posted"

Some broad examples of Physical & Financial inventory transactions are :

	Physical	Financial
Receipt (Stock Increase)	Ø Purchase order receipt  Ø Sales Returns (SO Returns) packing slip return  Ø Production order report as finished	Ø Vendor invoice  Ø Sales Returns (SO) invoice for a return  Ø Production order costing Ø Inventory Journals with positive stock
Issue (Stock Decrease)	Ø Sales order packing slip Ø Purchase returns (PO returns) product receipt return  Ø  Production order picking list	Ø Sales order invoice  Ø Vendor invoice return (Purchase returns invoiced) Ø Production order ended  Ø Inventory Journals with negative stock