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Administrator Guide
Last Updated: 2023-06-23
Concept: Currency Translation

Concept: Currency Translation

Currency translation enables you to report on financial balances and activity in a currency other than the company currency. Example: Your U.S. corporation has companies in the U.S., France, and Germany. To see results for the German company, you can run the trial balance from Germany and translate it to U.S. currency. The currency to which you translate is the translation currency.

Account Translation Methods and Rule Sets

You can specify how you want to calculate fiscal year beginning balance and activity using account translation methods. Translation methods use:
  • Delivered translation types (current, average, historic, custom) to determine how Workday calculates the translated amounts.
  • User-defined currency rate types to determine which specific currency rates to use in the calculation.
After you create account translation methods, you create rule sets to associate the methods with your ledger accounts in an account set. Each company has an account set, and that account set can have more than 1 translation rule set. Select 1 translation rule set as the default for the company.

Historic Rates and Currency Translation

Workday provides these approaches to translation of beginning balances:
  • Historic amount approach: Enter beginning balances by company and worktag for each account to get beginning balance amounts for each individual company. When you make prior-year adjustments after you enter beginning balances, you must reenter the translated beginning balance amounts.
  • Blended rate approach: Set up a historic, blended currency conversion rate for each account. To have Workday calculate the beginning balance amounts, use your historic rate type in your account translation method. The same blended rate applies to the entire ledger account. To calculate the historic blended rate, divide the translated ending balance for the prior year by the ending balance in company currency.
    If you’re running consolidated statements, the translation rule set that you use applies for all companies in the consolidation. The blended rate for consolidated and individual company reporting might differ.
    When you make prior-year adjustments, you must recalculate and update all the blended rates.
  • Workday recommends that you run a report that displays prior-year ending balances translated from company currency to the translation currency. Use the prior-year translated ending balance amounts to establish your translated beginning balances.
Example:
You use the account translation method of
Historic
 rate type for:
  • Beginning balances that use either a blended historic rate or manual entry of translated amounts.
  • Activity that uses the
    Current
     rate type as of the specific transaction date.
Description
Transaction Date
Ledger Amount
Translation Rate Type
Translation Rate Effective Date
Translation Rate
Translated Amount
Comment
2020
Transaction
2020-08-01
1000
Current
2020-08-01
2
2000
Translated activity
Transaction
2020-09-01
1000
Current
2020-09-01
3
3000
Translated activity
Ending Balance
2020-12-31
2000
―
―
―
5000
Sum of ledger amounts and sum of the translated amounts.
Enter 5000 as the translated beginning balance.
Or divide the total translated amount by the total ledger amount to get the blended historic rate beginning balance for the next year. 5000/2000 = 2.5
2021
Beginning Balance
2021-01-01
2000
Historic
2021-01-01
2.5
5000
Translated beginning balance
Transaction
2021-05-01
1000
Current
2021-05-01
4
4000
Translated activity
Ending Balance (Sum)
2021-12-31
3000
―
―
―
9000
Sum of ledger amounts and sum of the translated amounts.
Enter 9000 as the translated beginning balance.
Or divide the total translated amount by the total ledger amount to get the blended historic rate beginning balance for the next year. 9000/3000 = 3
2022
Beginning Balance
2022-01-01
3000
Historic
2022-01-01
3
9000
Translated beginning balance

Currency Translation in Financial Reporting

You can specify a translation currency when you run:
  • Financial statements and consolidated financial statements.
  • Trial balance and consolidated trial balance.
  • Consolidated plan summaries and plan details.
You can run these reports in any currency in which you have exchange rates for conversion. Each time you run a financial report, Workday recalculates the translated amounts based on the translation rule set. You can use the default or any of the other translation rule sets. Workday doesn’t store the calculated amounts for future use.
Report fields for translated amounts are available in the
Ledger Account Balances
 and
Journal Lines
 report data sources. Use reports to view beginning balances, activity, and ending balances for ledger accounts.
The currency translation complies with FASB 52 and IAS 21 standards.