Unable to Account for Exchange Rate Variances for Revenue and Invoices (Doc ID 392139.1)

Last updated on OCTOBER 06, 2023

Applies to:

Goal

Why is revenue generated for foreign currency expenditure items using an exchange rate based on the Accrue Through Date parameter rather than the dates of the expenditure items?

This is causing problems when revenue and invoices are generated on different dates, because the exchange rates used are therefore different and the revenue amounts do not match the billing amounts.

These conversion differences are not posted to any gain/loss or variance account, but rather to unearned revenue, or unbilled receivables, leaving a balance in these accounts even after all transactions have been fully processed.

Example:

Multi Currency Billing: Enabled

Agreement and all funding in functional currency (USD = US Dollars).

Corporate exchange rates

01->31 DEC 2010 .5 USD/CAD
01->30 NOV 2010 .75 USD/CAD

Enter expenditure items in CAD (Canadian Dollars):

EI Date: 19-NOV-2010
Currency: CAD
Amount: 100 CAD
Functional Exchange Rate Date: 19-NOV-2010
Exchange Rate type: Corporate
Functional Amount: 75 USD

Generate draft revenue for project (with bill rate same as cost rate)

Accrue through date: 29-NOV-2010
Exchange rate: .75
Revenue generated for US $75
DR to Unbilled Receivable = US $75

Generate draft invoices for project through 30-DEC-2010

Bill through date: 30-DEC-2010
Invoice Date: 30-DEC-2010
Exchange Rate: .5
Invoice generated for US $50
CR to Unbilled Receivable US $50

As a result, though the expenditure item has been fully processed the unbilled receivable account (UBR) has a net remaining DR balance of US $25.  This amount will not be cleared even when all transactions on the project have been fully processed.

Solution

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