Consolidate companies with multiple currencies and have Reach Reporting handle currency conversion automatically
You can consolidate companies with different currencies and have Reach Reporting automatically handle foreign currency conversion by using historical exchange rates within a consolidated company. For Profit and Loss and Cash Flow Statements, the monthly average exchange rates are used, and for Balance Sheet, the end-of-month exchange rates are used (in accordance with IFRS and GAAP guidelines - for more details, please reference documentation links below).
Translating the financial statements into the reporting/ presentation currency using different historical exchange rates leads to currency translation differences on the Balance Sheet (i.e. assets will not equal liabilities plus equity). For that reason, a balancing figure taking those differences into account should be introduced. Foreign Currency Translations Reserves (i.e. currency translation differences) are typically recorded under Equity section on the Balance sheet and under Effects of Currency Translation Differences on the Cash Flow Statement (as a separate line item, not under Financing Activities).
In the near future, Reach Reporting will automatically handle FCTR adjustments (i.e. currency translation differences) for you. In the meantime, you can use a custom row calculation and add the difference between assets and liabilities plus equity on the Balance Sheet and the Cash Flow Statement. Alternatively, you can book currency translation differences in a separate entity and then consolidate. If you need to eliminate certain accounts that have FCTR adjustments, you can do so by choosing them from the entity where adjustments are booked and leaving the offsetting accounts in the other consolidated companies unselected. This helps to properly convert your companies into the reporting/ presentation currency.
Watch the video below to find out how to use this feature.
Documentation Links:
IAS 21 The Effects of Changes in Foreign Exchange Rates (ifrs.org)
IAS 7 Statement of Cash Flows (ifrs.org)
830 Foreign Currency Matters (fasb.org) (search for 830)
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