Understanding CTA Set and CTA Detailed Report

Accounting principles mandate that when translating financial statements to a reporting currency, the closing rate for all Balance Sheet accounts is used, as well as the weighted average rate for Profit and Loss Accounts, and historical rates for Historical Accounts and Retained Earnings. After translating using these principles, if the books do not balance, then a plug account can be posted to a balancing account called Cumulative Translation Adjustment (CTA) to balance the books.

The balance posted to the CTA account is also known as unrealized gains or losses due to currency fluctuations. The balance posted to the CTA account is an accumulation of the FX gains\losses generated by multiple accounts in the natural hierarchy.

In Planful, a plug account must be specified for posting the unrealized gains or losses during Consolidation Setup. Consolidation Setup, is also where you specify the rollup accounts for Total Assets, Total Liabilities, and Total Equity. For converted currencies such as; common currency, interim currency, and reporting currencies, the system calculates Total Assets - (Total Liabilities + Total Equity). If the results of the calculation do not equal zero (unbalanced books), the difference is posted to the CTA plug account to balance the books. Using this method, Planful doesn’t provide the account details for the balance posted to the CTA account. You can overcome this using the functionality called CTA Sets.

How to Run CTA Set and CTA Detailed Report?

1. Navigate to Maintenance > Multi-Currency > CTA Sets.

2. Click Add.
   

3. Enter a Title and Description.
   
   

4. Specify a Base Rate. Typically this base rate has to be the closing rate of the period such as the EOM- End of the Month Rate.

5. Click Add Accounts and select the accounts that contribute to the CTA balance. Typically these are historical accounts such as Common Stock, Retained Earnings, and PPE accounts.

6. Under Target CTA Setup, specify the segment combination of the CTA account. This might be the same CTA account specified in the Consolidation Setup.

7. Save the CTA Set. Create as many sets as required.

8. Navigate to Maintenance > Hierarchy Management. Select the Dimension as Reporting and click Show.

9. Create a new Reporting Currency. To learn how to create Reporting Currency, click here.

10. Select a leaf level member of the Reporting Currency in Hierarchy Management. The Properties pane appears. Under Segment Properties, select Account Based for Calculation Type. Select other properties as required.

11. Select Overwrite default CTA.

12. Under CTA Sets, select the sets created earlier. Click OK and then click Save.

    
    

13. Run the Consolidation Process for the Reporting Currency.

14. Navigate to Maintenance > Report Administration > Standard Reports and Run the CTA Detailed Report (which must be deployed by an Admin user).
    
    

15. Select a Scenario, Period, Account, Company, Reporting, CTA Set(s), and Run the report.
    
    

16. For the accounts selected in the CTA set, the report provides the difference between the local currency balances converted using the currency type specified against the account versus the currency type specified in the CTA set definition.