In SAP system, up to 3 currencies can be maintained for each company code such as Company Code Currency, Group Currency, & Hard Currency. The company code currency is specified in the company code settings, it is a mandatory currency. You can define additional 1 or 2 currencies for each company code.

Oftentimes for group of companies, group currency is necessary to be set up. The group currency is used in consolidating the financial statements of the group of companies. Before you can complete the consolidation process in SAP system, all values in the financial statements of each company code (company) must be translated from the local or transaction currency into group currency.

There are some companies who are using SAP system encountering issues on account balance values between company code currency and group currency. Let’s take an example to provide a crystal clear explanation of the issue.

Case: Company A has a company code currency of AUD and group currency of AUD. Some of the g/l account has different values between company code currency and group currency, given the fact that both type have currency of AUD.

Explanation:

Every saved transaction amounts is translated to group currency. The translation basis is affected by the settings set up in the group currency. If the settings of group currency Source Currency is “translation taking transaction currency as a basis (1)”, then the difference between the company code currency and group currency amounts occur.

Remember the purpose of Group Currency is for consolidation purposes. Given this fact, the basis of translation to group currency should be the 1st local currency (which is the company code currency). Hence to resolve the issue of difference in company code and group curreny amounts, the settings of group currency Source Currency should be changed to “translation taking first local currency as a basis (2)”.

Here’s a simple procedure on how to configure the currencies:

Path: IMG → Financial Accounting (New) → Financial Accounting Global Settings (New) → Ledger  Define Currencies of Leading Ledger.

Transaction code: SPRO

Then double click the company code you want to change. In the Group Currency part, change the Srce curr. to “(2) Translation taking first local currency as a basis”.