Foreign Currency Accounts Summation Problem

Brice_HBrice_H Member Posts: 6

As seen above, the account balances for foreign currencies in the transactions page does not sum correctly for the selected account. The actual transactions in this account currently sum to 0CNY which is correct in the dropdown but incorrectly shows as 18.61USD. In reports, the conversion is correct for each line item, however the summations are incorrect between the ending balance and the total account change:

Additionally, wave just doesn't handle currency conversions well throughout the entire app. Every time I move money between accounts, like drawing cash out of an ATM, the conversions are never correct and I have to manually adjust the entries. If you ever have to add a past transaction where the exchange rate might have been different that day, Wave seems to use the current exchange rate. You then have to add a journal transaction to account for Unrealized loss to balance everything. Essentially, there is no good way for handling foreign currency moving between accounts as Wave is not accurate enough.

Comments

  • JamieDJamieD Administrator Posts: 1,145 admin

    @Brice_H To me, it sounds like we might need to do a bit of further investigating in terms of finding out what exactly is happening with the balance being off. As for the currency conversion rate -- we pull all of our data from www.xe.com to be as accurate as we possibly can when factoring in these amounts (sometimes, yes, they will need to be adjusted so they match up with what the current rate is and you will need to categorize specific transactions as unrealized gains/loss on foreign exchange). I'm going to send you a support ticket email with more detail on the initial issue you were running into so I can further assist here.

  • fpanierfpanier Member Posts: 0

    The main currency of our accounting system is EUR.As we are based in the Republic of Moldova we have both EUR and MDL bank account.We invoice our EU customers in EUR and our expenses are mainly in MDL.The total of the balance for the MDL bank account is right, but the total in EUR related to it is wrong as I can see a gap around 12% regarding the exchange rate.As a result of it my 'consolidated' cash flow (MDL+EUR) mentioned in EUR is wrong...Hope this comment will be an opportunity of improvement to avoid this gap.

  • domhardydomhardy Member Posts: 4

    Hi @JamieD,

    Was anything investigated and resolved here? I seem to be having a similar issue. When looking at a report for an EUR account I have, the conversion to my GBP base currency for the totals seems ok initially but the FX conversion for the ending balance is way off.

    Please see the below screenshot:

    1,288 EUR is the correct end balance - I have reconciled this with my bank account.

    The Credit and Debit totals seem broadly correct - I have not manually summed all these values in the report but I suspect the values here are just the sum of all the transactions in the report for both currencies - so no FX going on here directly for these totals.

    The ending balance though seems way off. 1,288.74 EUR is not 2,480.91 GBP (should be more like 1,120 EUR)!

    It looks like the ending balance is just calculated by taking the difference between the credits and debits? Obviously though this is not quite correct. This should use the FX rate in effect on that day?

    Thanks in advance.

    edited April 18, 2020
  • domhardydomhardy Member Posts: 4

    I think I have posted a similar comment to this in this thread here:

    https://community.waveapps.com/discussion/4333/foreign-currency-accounts-summation-problem

  • NicoletteBNicoletteB Administrator Posts: 122 admin

    @domhardy @fpanier thanks for reaching out about this; I've merged the topics due to their similarity and moved them to our Accounting forum for better visibility. For-ex is a bit of tricky issue since it's very account dependent. The best course of action here is for you to open up a support ticket so we can investigate what technical issues are running into and how to best handle these transactions

  • domhardydomhardy Member Posts: 4

    @NicoletteB - Ok thank you. I have done that now so will post any response here for the benefit of all. Thanks.

  • AmaranathoAmaranatho Member Posts: 14

    Thanks I'm having the same problem - has there been any update about this - thanks!

  • BarsinBarsin Administrator Posts: 1,811 admin

    Hey there @Amaranatho

    Would you be so kind as to provide direct examples as to what issues you're seeing with your account? Getting some exact data might give us a better idea of what exactly the issue might be and how we can fix it. Thanks.

  • AmaranathoAmaranatho Member Posts: 14

    Thanks @BarsinA I have a euro business account and in my personal account - I have a bank account which has AUD and GBP and both of those accounts have the wrong converted amount. It is off by at least 3 times. Have no idea what is going on!

    edited June 2, 2020
  • CalliePCallieP Administrator Posts: 439 admin

    Hey @Amaranatho , thanks for getting back! I see that you've submitted a ticket to our Support team and your issue is being worked on there. :)

  • AmaranathoAmaranatho Member Posts: 14

    yes it is and and usual it is not being resolved.

  • B1llN3w3LLB1llN3w3LL Member Posts: 1

    Yes, I am having the same problem at the moment. The currency that is used in my country of residence is the Euro but I have a USD account which I transfer money out of into my Euro account. I basically emptied the USD account into my Euro account and when I check on the balance on Wave it shows up as $0, which is correct. However, on the balance sheet the USD account shows up as having a balance of EUR 2.02. I'm guessing this is due to the exchange rate changing between transactions and Wave is accounting for this and therefore imagining that there are still a couple of Euros worth left in the USD account even though it has been completely emptied. Does anyone have any idea how to solve this? I thought of posting a journal for unrealized gain on foreign exchange but that doesn't make any sense because I didn't gain anything; there was no "foreign exchange" to begin with; it is a USD account and that's all there is to it, lol.

    It would appear that, because Wave is translating the balances for the USD account into EUR in real-time, when it comes to actually withdrawing money from the account, say, $100, then $100 yesterday is not the same in Euros as it is today as the exchange rate has changed since then. I have tried to rectify the problem manually but because the EUR balance of 2.02 is only showing up in two places (ie the balance sheet and the link from the balance sheet to the USD account, but not in my transactions list where it shows the balance of the USD account at the top of the screen), when I try to change it with, say a manual journal entry, I would be creating a negative balance in the account. I would really appreciate if there was a way to stop this additional 2.02 Euros from showing up on the balance sheet because really it shouldn't be there.

  • BarsinBarsin Administrator Posts: 1,811 admin

    Hey there @B1llN3w3LL

    Unrealized gains and losses appear in two places: as an asset (gain) or liability (loss) account, and as a revenue (gain) or expense (loss) account; the revenue/expense side is included in the calculation of profit for the year, which also appears on the balance sheet in the equity section.
    If there is unrealized gain or loss on bills or invoices at the end of the year, when the bills or invoices are paid in the following year, the realized amount of gain or loss is recorded on the date of the payment (and is recorded to the “gain on foreign exchange” or “loss on foreign exchange” account). Once that occurs, any outstanding unrealized gain or loss in prior years is zeroed out; one side of the difference is in the profits from prior years line item, and the other is the unrealized gain asset account or unrealized loss liability account.

    An example: let’s say on 12/31/19 I have a $100 unrealized loss on a foreign currency invoice. On the 2019 balance sheet, there will be a $100 line item under liability called “unrealized loss on foreign exchange,” and the “unrealized loss on foreign exchange” expense account will be included in the “Profit between Jan 1, 2019 and Dec 31, 2019” line item.
    When the invoice is paid on 1/3/20, the actual amount of gain or loss is booked the “loss on foreign exchange” expense account as of 1/3/20. So the balance sheet recalculates the “profit from all prior years” without the unrealized gain or loss amount since it is now recognized in 2020.

    Manual Fix

    When a foreign currency bank account reaches a zero balance in the foreign currency, there is usually a home currency balance in the account, due to foreign exchange rate fluctuations over time as transactions are recorded. If you zero out the balance in the business currency by creating a journal entry (the other side is gain/loss on foreign exchange), Wave calculates a corresponding foreign currency amount which is then recorded into the balance of the account. This means that ultimately, either the account will show a business currency balance (which is a 'phantom' account balance on the balance sheet), or the account will hold a foreign currency balance (which doesn't appear on the balance sheet, but then the bank account can't be reconciled as there is a 'phantom' transaction in the foreign currency).

    We're working to make it possible for you to be able to update the business currency balance of a foreign currency bank account without also creating a foreign currency transaction amount. This would prevent your balance sheet and/or the account to have a phantom amount.

    A workaround is to create a related functional/home currency “valuation” asset account, where you can make entries in the functional currency only, so the net of the valuation account and the bank account will be correct. We're working on automating this process, but in the meantime, this must be manually done by you. If you have further questions on the accounting principles of this, please reach out to an accountant. The valuation account would need to be the same account type as the account which needs to be balanced. So if it's an asset account you're looking to revaluate, you can create an asset valuation account. Picture it like a placeholder account here you can store the balance away from your actual account. This is definitely a workaround and we appreciate your patience until we eventually give the option to change currencies in Wave.

    Wave is currently building a transaction rewrite which will, in its final phase, include the tools needed to reconcile these ghost amounts. I don't have an ETA for this launch, but I can say that it is the current primary focus of the accounting product team. Thank you for your patience while we build this feature out to completion.

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