Revaluing foreign balances

What this does

When exchange rates change, the value of your foreign currency balances shifts. A revaluation process adjusts your account balances to reflect current exchange rates and records the difference as an FX gain or loss in your profit and loss statement. This ensures your books are accurate and compliant with accounting standards.

Before you start

• Permissions: You must have access to the accounting or reporting settings (usually granted to finance admins or account managers).
• Current exchange rates: Ensure your exchange rates are up to date in the system. Set the rates for the currencies you need to revalue.
• Date and currency: Know the revaluation date (usually month-end or quarter-end) and which currencies need revaluing.
• FX accounts: Your chart of accounts must have designated FX Gain/Loss and FX Revaluation accounts configured.

Steps

1. Go to Accounting → Revaluation (or the equivalent path in your product). Open in Usystems

2. Choose the revaluation date (the date as of which you want balances valued). This is typically your reporting date (e.g., month-end, quarter-end, or year-end).

3. Select the currencies to revalue. You may revalue all foreign currencies or choose specific ones.

4. Review the summary: Usystems shows you the current balance in the home currency, the balance at the original rate, and the calculated gain or loss for each account.

5. Confirm and post the revaluation. Usystems creates journal entries that:

   • Adjust each foreign account balance to the current exchange rate
   • Post the difference to your FX Gain/Loss account (for realized gains/losses on settled transactions) or FX Revaluation account (for unrealized gains/losses on open balances)

6. Check the Transactions or Journal view to see the posted revaluation entries and confirm they are correct.

Accounting impact

Revaluation postings affect two accounts:

• Balance sheet accounts (Customer balances, Vendor balances, Bank accounts in foreign currency) — adjusted upward or downward to reflect the new exchange rate.
• FX Gain/Loss or FX Revaluation account — recorded with the opposite debit/credit to balance the entry. For example, if a USD customer balance goes up in home-currency value due to USD appreciation, you debit the customer account and credit FX Gain (revenue).

These entries flow into your profit and loss statement and balance sheet, impacting net income and equity.

Tips & common mistakes

• Timing: Revalue at period-end (month, quarter, or year) to align with your financial reporting cycle. Do not revalue mid-period unless specifically required.
• Exchange rates: Before revaluing, verify that the exchange rates in your system match your source (central bank, market rate, or contracted rate). Wrong rates lead to wrong adjustments.
• Prior revaluations: If you have already revalued in a period, check whether you are revaluing a second time (which may double-adjust). Revaluation is typically done once per period.
• Documentation: Keep a record of the revaluation date and rates used for audit trails and financial reporting.

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