Ledger Setup
Part of Multi-currency accounting tools
Reviewing currency adjustments with an accountant
Prepare the records, rate evidence and reports an accountant needs to review a foreign-currency adjustment.
Present a proposed currency adjustment to the accountant as a specific difference, supported by source records, rates, dates and the affected reports.
Establish what the balance represents before posting. A changed exchange rate can affect an unpaid monetary item; a fee, missing payment or report setting calls for a different investigation.
Prepare the review pack
State the entity, functional currency, reporting date and account. For each questioned item, provide the original invoice, bill or bank record; foreign amount; amount already recorded; transaction and payment dates; rates used; and any credit or part payment.
Include the open-item list, bank reconciliation and relevant trial balance or report. Save the pre-adjustment reports with their filters.
| Finding | Question for the accountant |
|---|---|
| Open foreign receivable or payable | Is this a monetary balance that needs reporting-date translation? |
| Settled invoice or bill | What difference arose on settlement, and what has the software already recorded? |
| Foreign bank account | Do its foreign units agree with the statement, and is its functional-currency value appropriate? |
| Historical-cost item | Is its transaction-date rate still the relevant rate? |
| Fee or missing record | Is the difference a charge or omission rather than a rate change? |
| Translated report view | Did the underlying account change, or only the report presentation? |
AASB 121 sets out how foreign currency transactions and foreign operations are included in financial statements and how financial statements are translated into a presentation currency. The accountant must classify the actual balance and decide the treatment that applies to the entity.
Prepare the review pack: Key items to include
- Entity and functional currencySpecify the business entity and its functional currency (e.g., AUD)
- Reporting dateInclude the financial reporting date for translation
- Original transaction recordAttach invoice, bill or bank statement in foreign currency
- Foreign amount and recorded amountShow both the original foreign currency value and the AUD value recorded
- Transaction and payment datesProvide exact dates for transaction and settlement
- Exchange rates usedInclude source and date of exchange rate applied
- Open-item list and reconciliationAttach current open-item list and bank reconciliation
- Pre-adjustment reports with filtersSave copies of reports used before adjustment, including filter settings
When to investigate vs. when to adjust
- Pros: Investigate furtherIf difference is due to missing fee, omitted record, or incorrect report setting rather than exchange rate change
- Cons: Post adjustment without reviewAvoid posting a journal just because two screens differ; confirm impact on reports first
Check what the software has already done
Do not post a journal just because two screens differ. MYOB says enabling multi-currency creates a Currency Gain/Loss income account to track gains and losses from exchange rate changes, set as the default linked account for currency gains and losses. The accountant should inspect how an open balance will be reviewed in that setup.
QuickBooks Online’s Australian FAQ says an adjustment for receivables or payables can create a zero-amount journal that stores the revaluation date and rate. Unrealised effects appear in certain reports, not the general ledger or trial balance.
The accountant should compare the exact reports used for approval before treating a report difference as a posted ledger adjustment. Availability and behaviour in the proposed account remain to be checked.
For each proposed action, record the source and date of the rate, affected items and accounts, expected result, approver and reason. Ask whether an approved period, issued report or lodged BAS could be affected. A software label does not determine the tax response.
Software handling of currency adjustments
- MYOB Multi-CurrencyCreates a Currency Gain/Loss income account; tracks gains/losses automatically
- QuickBooks OnlineMay create zero-amount journal to store revaluation date and rate; unrealised effects shown in reports only
Review the result
After an authorised change, compare foreign units and functional-currency amounts before and after. Recheck the open-item list, relevant account, bank reconciliation and reports that raised the question.
Keep both report versions, the rate evidence and the accountant’s decision. Close the issue when another reviewer can follow the original balance, the approved action and the final reported result.
Review process after authorised change
- Compare pre- and post-adjustment valuesCheck foreign units and functional-currency amounts before and after the adjustment
- Revalidate key recordsRecheck open-item list, relevant account, bank reconciliation, and original reports
- Preserve evidenceKeep both report versions, rate evidence, and accountant’s decision record
- Close the issueEnsure another reviewer can trace original balance, approved action, and final result
