Using CTA Sets
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Using CTA Sets

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Article summary

Perform CTA (Cumulative Translation Adjustment) calculations on specific sets of accounts instead of calculating CTA as a whole. This involves focusing on accounts like Cash and Cash Equivalents utilized in Cash Flow statements. 


When CTA Sets are Necessary

CTA Sets are essential for generating values in Cash Flow statements using the Reporting currency. Here's an example setup:

  • Configure the Reporting currency to convert all accounts using the same rate and calculation type.
  • Make exceptions for Cash and Cash Equivalent accounts, using the End of Month rate and Balance Type calculations.
  • Set up CTA Sets to calculate CTA solely on Cash and Cash Equivalent accounts.

This configuration ensures that the application calculates the CTA impact solely on the designated accounts within the CTA Set.

Notes:
  • CTA sets become necessary for international businesses to convert functional currency balances into another currency for reporting. For instance, a company using euros as its home currency but operating in dollars.
  • When exchanging currency for foreign market use, gains and losses may occur due to fluctuating currency values. The CTA Set is employed to account for gains or losses associated specifically with exchange rate changes. For example, if the rate for euros to dollars changes from 1 to 1 to 1 to 2, a gain occurs. Conversely, if the value shifts from 1 to 2 (dollars to euros) to 2 to 1 (dollars to euros), a loss arises.

Establish CTA account sets (or groups of accounts) to manage gains or losses resulting from involvement in foreign currency business. Identify source accounts where CTA is calculated and target accounts where CTA is posted.


There are three areas in the application where CTA Sets need to be defined:


How to Set Up CTA Sets?

This is where you define the accounts where you want CTA calculated and posted. For example, you can set the account of your CTA account to an Owner's Equity account to create a translation adjustment on your balance sheet. Or, set the account to a Revenue or Expense account to create a translation gain/loss on your income statement. 

  1. Access CTA Sets by selecting Maintenance > Multi-Currency > CTA Sets.
    CTA sets
  2. If you already have CTA Sets defined, they will be listed as shown below. Otherwise, click the Add icon.
    Add cta
  3. Two panes are enabled. The left pane displays CTA Sets created, those that are in the process of being created (Unsaved Sets).
    base rate
    A description of all fields on the page above is provided below:
    • Select the Base Rate in which the CTA will be calculated. Base rates are set up on the Currency Type page, which can be accessed by selecting Maintenance > Multi-Currency > Currency Setup and then clicking the Currency Type tab.
    • Source Accounts - Select the accounts to include in the CTA Set. Click Add Accounts.
    • Manage Source Account(s)- Add accounts to the set. The accounts you select will calculate CTA.  Expand and collapse the hierarchy or search for accounts. Selecting the checkbox next to the account adds it to the Selected Accounts pane as shown below.
      save(9)
    • Target CTA Setup - Click the Browse icon next to each dimension to select a value for Account, Department, Product, Project, Customer, Custom 2, and Interco. The account selected here is where CTA will be posted.
      browse icon(1)
  4. Click Save.
    save 2
    Note: You can also perform the below actions on the CTA Sets page. 
    • Refresh- Click the Refresh icon to refresh the page.
      refresh(1)
    • Delete- You can delete CTA Sets using the Delete icon. Select the checkbox next to the CTA Sets and click the Delete icon.
      delete cta 2
    • Copy- Select the checkbox next to the CTA Sets and click the Copy icon to copy a CTA set.
      copy cta
    • Show Ascending/Descending- Click the  Show Ascending/Descending icon to sort the CTA Sets in increasing or decreasing order of the alphabet. sort ascending decending
    • Select All- Select the checkbox next to Select All to select all the CTA Sets.
      select all
    • Showing All- Search for CTA Sets using the initials and press Enter to view the search results.
      showing all


How to Specify CTA Accounts in Consolidation?

You can specify the Target Balance Sheet, Balance Sheet Members for Balancing, and Income Statement CTA Account Sets in Consolidation. Perform the below steps to set up CTA Sets in consolidation:

  1. Navigate to Consolidation to open the Consolidation Control Panel
  2. Click Consolidation Setup under the Administration pane.
    Consolidation Setup
  3. Specify CTA account sets defined on the CTA Set page.
    cta on
  4. Click Save


How to Set Up CTA Sets in Hierarchy Management?

You can configure reporting currency to calculate the currency and cash flow conversions with CTA Sets on the Hierarchy Management page. This is where you can overwrite the default target CTA. You can do this when you determine the impact of each account on the total CTA and you want to post CTA calculated on a selected set of accounts to a different set of target accounts.

When you create a CTA Set, you define the following:

  • Source accounts on which CTA needs to be calculated
  • Target account to which CTA needs to be posted - you can overwrite these accounts for a reporting currency member in hierarchy management.
  • Base rate to calculate the CTA on the Source accounts
Note:
This functionality allows the CTA calculation to take place on Reporting Currency members and not on Common Currency.


Perform the below steps to overwrite the default target CTA:

  1. Navigate to Maintenance > Hierarchy Management and select Type as Finance Hierarchies, Dimension as Reporting, and Hierarchy as Reporting.
    reporting
  2.  Click Show
  3. Select a reporting member. Select the Overwrite default CTA checkbox to overwrite the default CTA target posting accounts.
    overwrite CTA
  4. Once Overwrite default CTA is selected, CTA Sets is enabled in the lower portion of the pane. Click Manage to add sets defined on the CTA Sets page or manage existing sets.
    manage(1)
  5. Search and select CTA Sets by enabling the checkbox. Click Save to commit selected CTA Sets.
    Save CTA sets

When you run the Consolidation Process on the reporting member, the CTA calculation will be performed on the accounts specified here.


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