Learn how to run the Sage Intacct revaluation process and post an entry to the general ledger at the end of every financial period. The step-by-step process below can come in handy for all users of global consolidations.
The value of transactions that occurs during the month that is not settled (AP bill incurred but not paid) by the end of the month, represents unrealized gains or losses to the business due to changes in currency rates.
Example: Imagine a company that operates with a base currency of US Dollars. On July 15th, they incur an expense of 1,000 Euros that they do not pay by the end of that month. When the expense was incurred, the exchange rate between Euros and US Dollars was 1.00168. At the end of July, the exchange rate was 1.02254.
The difference between the two rates (1.00168 – 1.02254 = -0.02086), multiplied by the transaction amount of 1,000 Euros, represents an unrealized loss of $20.86 due to currency fluctuations. These amounts are posted to the financials to represent these currency fluctuations.
When the AP bill is finally paid, for instance on August 1, the system would record a realized loss of $20.71, representing the difference between the rate at the time of the invoice (1.00168) and the rate on the day the invoice is paid (1.02239).
Steps for Revaluation Process in Intacct
1. Set-up:
For each entity, identify any Asset or Liability accounts other than AR, AP, and Cash accounts that are transacted in a foreign currency with respect to the base currency of the entity, and will be settled in the foreign currency (for example loans).
- Suggest exporting the COA, identify all accounts subject to revaluation, and then create a GL Group for these accounts – use a name like “GL Revaluation Accounts”.
- General Ledger > All > Financial Structures > Account Groups
https://deandorton.com/wp-content/uploads/2022/08/General-Ledger-Revaluation-Report.pnghttps://deandorton.com/wp-content/uploads/2022/08/Journal-Entry-Creation.png
2. Run the General Ledger Revaluation:
Run the General Revaluation Report as of the last day of the month.
- General Ledger > Reports > General Ledger Revaluation
- Enter “As of Date” (typically the last day of the reporting period)
- Revaluation Date (typically the last day of the reporting period)
- Select Account Group “GL Revaluation Accounts”
- Set Location
- Either check the box for “Auto-create draft JE when offline”, or check the box after you’ve run the report
- Reverse the entry on the first day of the following month
https://deandorton.com/wp-content/uploads/2022/08/AR-Open-Items-Revaluation-Report.png
3. Run the AR & AP Open Items Revaluation Reports:
Post the adjusting entry to the last day of the month.
- Go to Accounts Receivable > All > Reports >AR Open items Revaluation
- Enter the date of the revaluation – typically the ending day of the month
- Enter the name of the Location or Entity
- Allow the system to auto-create the entry, or create it after running Revaluation Report. The entry should be reversed on the first day of the following month.
https://deandorton.com/wp-content/uploads/2022/08/CM-Revaluation-Report.pnghttps://deandorton.com/wp-content/uploads/2022/08/Journal-Entry-Creation.png
4. Run the Cash Management Reconciliation:
- Go to Cash Management > All > Reports > Revaluation
- Post any needed adjustment to the GL – note: this entry cannot be automatically created, but requires the user to manually post a journal entry. Also, this entry does NOT get reversed at the start of the following month.
https://deandorton.com/wp-content/uploads/2022/08/Account-Group-Information.png
Jim Stubanas
Business Software Services Manager
jstubanas@ddaftech.com • 919.508.6068
