When are CTA Sets Required

CTA Sets would be required to generate values for Cash Flow statements using Reporting currency. You might set this up as follows:

• Configure the Reporting currency will all accounts being converted using the same rate and same calculation type.

• Create exceptions for Cash and Cash Equivalent accounts to be converted using End of Month rate and Balance Type calculations.

• Configure CTA Sets to calculate CTA only on Cash and Cash Equivalent accounts.

The setup above results in the application calculating the CTA effect only on the accounts selected in the CTA Set.

CTA sets may be required for international businesses that choose to translate functional currency balances into another currency for reporting purposes. For example, a company's home currency is euros, but the company operates in dollars.

As part of converting all transactions to a selected currency, the need to exchange currency for use in the foreign market can result in various gains and losses. Currency values fluctuate, changing how one currency is valued against another. To account for these changes, the CTA Set is used to account for the gains or losses solely related to changes in the exchange rate.

Using the example above, let's say you have a company whose home currency is euros, but the company operates in dollars. The company will have to record the CTA to compensate for currency value changes. If the rate for euros to dollars changes from a 1 to 1 value to a 1 to 2 value, a gain results. On the other hand if the value changes from 1 to 2 (dollars to euros) to 2 to 1 (dollars to euros) then a loss results.

To take advantage of this functionality, set up CTA account sets (or a group of accounts) to handle the gains or losses that have occurred by participation in foreign currency business. You'll identify accounts where CTA is calculated (source accounts) and accounts where CTA is posted (target accounts)