Foreign Currency Reevaluations

What is it and what is it for?

When you register invoices, collections or payments in a foreign currency, every ledger account affected (for example your dollar bank account, or the receivables from a customer who pays you in that currency) ends up recorded with two values: the amount in the foreign currency and its equivalent in your functional currency, calculated with the exchange rate in effect at the time of each transaction.

Because the exchange rate moves up or down over time, the functional-currency value of those accounts stops reflecting the current market rate. The Foreign Currency Reevaluation solves this: you enter the currency and the new exchange rate as of the adjustment date, and AdmCloud:

• Reviews every ledger account (excluding summary and statistical accounts) that is denominated in that currency and flagged as "requires currency" (typically bank, cash, receivables and payables accounts).
• Recalculates, for each one, what its balance in your functional currency would be if the foreign-currency balance were converted at the new rate you entered.
• Posts the difference between the previous balance and the recalculated one, affecting the reevaluated account and, on the other side, your foreign exchange gain or loss account (configured on the subsidiary's settings).
• Automatically generates the related accounting entry, viewable from the Journal Entry button on the document's detail screen.

If your company uses Subsidiaries, the reevaluation only affects accounts belonging to the document's subsidiary (or all of them, for accounts with no subsidiary assigned).

How to use this screen

1. Browse the list. From Accounting open Foreign Currency Reevaluations to see the ones already recorded, filter by date, subsidiary, show or hide voided ones, and customize which columns you see.
2. Create a new reevaluation. Use the New button, enter the adjustment date and pick the foreign currency to reevaluate. As soon as you pick the currency (or change the date, while creating), AdmCloud automatically suggests the exchange rate registered for that currency on that date; you can accept it or type a different one.
3. Save the document. On save, AdmCloud walks through the accounts in that currency, calculates the exchange difference for each one and generates the accounting entry automatically — you don't have to build the entry's lines yourself.
4. Review the detail. From the detail screen you can see the generated accounting entry, duplicate the adjustment (for example for next month), edit it, void it or delete it, depending on your permissions.
5. Print the reevaluations report. Use the report button on the list to get a printable report filtered by date range, subsidiary and currency.

Key fields

Validations on save

• The currency is required. You cannot save the adjustment without indicating which foreign currency is being reevaluated.
• The exchange rate must be greater than zero. If left blank or set to zero, AdmCloud rejects it; a negative rate is not accepted either.
• The accounting period must be open. You cannot create, edit, void or delete an adjustment dated within an already-closed Accounting period.
• The document number cannot be changed once the adjustment has been created.
• An already-voided adjustment cannot be edited.
• It cannot be edited if its movements are already reconciled in a Bank Reconciliation; you must first undo the corresponding reconciliation.
• It cannot be deleted or voided if it has dependent records (for example, if a fiscal report or another document linked to its accounting entry was already generated).

Availability and permissions

This screen belongs to the Accounting module and requires your company to have multi-currency enabled; if your plan only allows a single currency, you will not see this option. On the Enterprise edition, the Accounting module must also be active among your account's enabled modules.

Access is controlled with the Journal Entries permission on the user group (shared with Journal Entries and Local Currency Adjustments): the browse level is needed to view the list and detail, the add level to create new adjustments, the edit level to modify them, the delete level to delete them, and the void level to void them.

Tips and common mistakes