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    AP Payment- Wrong Exchange Rate> BASE /Functional amount...
    Topic posted November 25, 2018 by AmolBronze Trophy: 5,000+ Points, last edited January 30, 2019, tagged Cash Management, Financials, Payables, Period Close / Reconciliation, Subledger Accounting 
    65 Views, 1 Comment
    AP Payment- Wrong Exchange Rate> BASE /Functional amount wrong on Payment

    Hi there,

    Scenario :

    AP Invoice is in Foreign Currency (USD) and CORPORATE rate was used.

    Correspondiong AP Payment is again in Foreign Currency(USD) and USER TYPE rate was used.

    At this step user has keyed in wrong value for the RATE - instead of putiing 1.38, 0.72 has been put..(Payment in USD has been paid correctly by bank but bcoz of wrong value of FX rate base/functional amount of PAYMENT has been wrongly calculated by system)

    This has no impact I beleive on any event but I guess FX Gain/Loss will be wrongly calalculated in PAYABLES.

    Any comments ?Manual Journals for FX gain/loss adjustment etc.






    • Prithis Das

      The impact is that the gain/loss amounts would be incorrect.

      Ideally the payment should be voided (which would reverse the accounting) and re-entered with the correct exchange rate. However, this may not be feasible as the original payment may have been reconciled, and voiding it will lead to unnecessary complications. So if the original payment was done through a check/Electronic payment, the best option to rectify the mistake would be to pass a manual adjustment journal entry for the correction of the exchange rate gain/loss.

      If however the original payment was a manual recorded payment (eg Wire recording), then it may be possible to reverse the payment (which will reverse the accounting), and re-enter the manual recording with the correct exchange rate. Here again you may need to un-reconcile the payment with the bank statement to void it (if it is already reconciled), but the complications would be fewer as it is just a manual recording of a payment, and there is no interaction with the payee.

      You can also consider another solution if the original payment was through a check/Electronic method. Void the original payment, and then record it as a manual payment with the correct rate. You will need to change the payment method on the invoice for this.