What is PVA and VAL? And How should I do translation per GAPP in HFM?

There are 2 standard methods of translating an account, PVA and VAL.

PVA:

This method retrieves the periodic value for an account and multiplies that by the exchange rate for that period to obtain the translated amount for the current period. Then the translated amount for the current period is added to the prior period’s year-to-date (YTD) translated balance in order to calculate the YTD translated amount. The PVA method is usually applied to Income, Expense, and Flow type accounts.

VAL:

This method retrieves the YTD value in an account and multiplies that by the exchange rate. The VAL method is usually applied to Asset, Liability, and Balance type accounts.

An example of PVA and VAL is as follows:

PVA

	JAN	FEB	MAR	(Divide)
AVERAGE RATE.FRANCS	0.5	0.6	0.7
INCOME ACCT (EURO)	100	300	600	(YTD Amounts)
INCOME ACCT (USD)	200	533	962	(Translated Amt After Consol)

The PVA method takes the periodic value in the INCOME ACCT and divides that by the exchange rate for that period. It then adds this result to the translated value from the prior period. It does not change the exchange rate amount or look to the prior period for the exchange rate at all. In the example above the calculations are as follows:

JAN 100 / 0.5 = 200
FEB (300 – 100) = 200 / 0.6 = 333 + 200 (JAN) = 533
MAR (600 – 300) = 300 / 0.7 = 429 + 533 = 962

VAL

	JAN	FEB	MAR	(Divide)
AVERAGE RATE.FRANCS	0.5	0.6	0.7
INCOME ACCT (EURO)	100	300	600	(YTD Amounts)
INCOME ACCT (USD)	200	500	857	(Translated Amt After Consol)

Using the VAL method instead of PVA, the results would be:
JAN 100 / 0.5 = 200
FEB 300 / 0.6 = 500
MAR 600 / 0.7 = 857

Contributed by:
Peter Fugere, Practice Director
HFM & HE Hyperion Certified
Ranzal & Associates
pfugere@ranzal.com