GST & Reporting
Part of Multi-currency accounting tools
Comparing transaction and reporting currencies
Separate a foreign invoice balance from its functional-currency value and the currency used to present reports.
A foreign invoice amount, its value in the business’s functional currency and the currency used to present financial statements answer different questions. Label each before comparing totals. Changing a report view does not change what the customer owes under an invoice.
Follow one amount through the accounts
Suppose a business invoices USD 1,000 and its functional currency is AUD. Until a payment or credit changes the debt, the customer owes USD 1,000. On initial recognition, the business records an AUD value using the applicable transaction-date rate.
If the receivable remains open at a reporting date, its AUD value may change when the monetary balance is translated at the closing rate. The example excludes GST, fees and part payments.
| Figure | Question it answers |
|---|---|
| USD invoice balance | What remains owed under the document? |
| AUD value at initial recognition | What entered the functional-currency accounts? |
| AUD value at reporting date | What is the open monetary balance worth under the reporting-date rate? |
| Presentation-currency amount | In what currency are the financial statements shown? |
AASB 121’s stated objective covers foreign currency transactions and translation of financial statements into a presentation currency. Ask the accountant to confirm which accounting standards apply to the entity and how they apply to the actual item.
Make the reports comparable
Confirm the entity, date or period, accounting basis, filters and currency beside each total. An open-invoice list in USD, a ledger view in AUD and financial statements presented in another currency can differ without any one figure being wrong. A management report with a currency selector is not necessarily a formally translated set of financial statements.
Trace the invoice from its source document to the initial entry, open balance and later receipt. Record the rate and its direction at each stage. Keep the report settings and preparation date so a later rerun can be interpreted.
In MYOB AccountRight Premier 2018.3 and later, multi-currency features let users enter exchange rates, choose a default currency for each card and create foreign-currency bank accounts. Currency information is available in windows including Purchases Register and Reconcile Accounts.
QuickBooks Online records foreign transactions in different currencies and converts them to the home currency. A single currency can be assigned to most types of accounts, including customers, suppliers and chart-of-accounts entries.
Tracing a Foreign Invoice Through the Accounting System
- Initial accounting entryConvert to AUD using transaction-date rate and post to functional currency ledger.
- Reporting date translationRe-translate open receivable at closing rate for financial statement purposes.
- Financial statement presentationPresent final amounts in the entity’s presentation currency (e.g., AUD), as required by AASB 121.
Explain a difference
Check the source amount and currency, entity and period, rate and date, payments or credits, then report filters and currency. Separate a settlement difference from a change in report presentation. Keep the original foreign amount visible while the accountant decides whether an accounting adjustment is needed.
Verify Currency Consistency Across Reports
- Check source amount and currencyConfirm original invoice was recorded in correct foreign currency.
- Review exchange rate and date usedDocument rate applied at transaction and reporting dates.
- Check for payments or creditsIdentify any partial payments or adjustments affecting the outstanding balance.
- Validate report filters and currency settingsEnsure views match intended currency (e.g., AUD vs USD) and include all relevant data.
