Differences in the opening balances | Multicurrency

In accountings that include foreign currency accounts, it is necessary to register exchange rate differences before closing the fiscal year.

To correctly record exchange rate differences, follow these steps:

• Update the Exchange Rates table, in the Exchange Rate column, with the official exchange rate as of 31st December, provided by the Public Administration.
• The closing exchange rate must appear in rows without a date.
• It is not possible to use a historical exchange rate (an exchange rate with a date); otherwise, exchange rate differences may arise.

If, when opening the new year (from the Actions menu > Create New Year), or when updating the opening balances (from the Actions menu > Update Opening Balances), the exchange rate differences are not recorded, the program will report a discrepancy in the opening balances in the new fiscal year.

In order to resolve this problem, there are two possibilities:

1. If the preceding accounting year has not yet been audited, calculate the exchange rate differences for the previous year:

• Enter the official exchange rates as of 31st December into the Exchange Rates table, in the Exchange Rate column, in the rows without a date.
  (or the closing exchange rates provided by the company’s statutes).
• Via the Actions menu > Create transactions for exchange rate variation.
• Open the file for the New Year and Update opening balances 
   

1. If the previous year was closed and audited (and, if applicable, also reviewed), the new year's opening balances must be adjusted:

• Open the file of the new year
• Insert a new account Non-calculated exchange differences, in the assets or liabilities (Accounts table), as appropriate, or register the amount in account 1090 Transfer account (as in the example below)
• Enter the amount corresponding to the exchange rate difference in the Opening currency column

• In the accounting records of the new fiscal year, a balance related to exchange rate differences is generated in the Opening Currency column of the Accounts table, which must be adjusted.
  To adjust the difference, proceed as follows:
  • In the Transactions table, on January 1st (or on the statutory opening date), record the amount of the exchange rate differences in the account Uncalculated Exchange Rate Differences, or as in the example, in account 1090 - Transfer Account, using as the counterpart the Exchange Rate Differences account (Gains and/or Losses on Exchange Rates) in the income statement.

After the transaction to arrange the exchange rate differences has been entered, the account that has been used should display a balance of zero, or equal to the amount corresponding to the balance prior to the transaction.

In the case of an exchange rate gain, the amount of the difference must be entered in a liabilities account, or in the assets, but with a minus sign in front of the amount. 

This amount, which initially impacts the Income Statement of the new fiscal year, is then nullified during the first exchange rate update, which can be performed as needed during the year. If this is not the case and exchange rates are only updated at the end of the fiscal year, the position of the Gains and/or Losses on Exchange Rates account will still be correctly adjusted.