I feel I have a good understanding of accounting but now I am confused. We use quickfile for accounting and use an accountant that is about to file the yearly accounts. They use their own system so they take the data from quickfile and put into their own system.
One USD loan account has a balance of USD -180K, and the accountant tells me they needed to add a journal of 30K to make it match the opening balance of their own system and the previous filed accounts.
I feel something must be wrong somewhere. Are we supposed to have to add journals into quickfile foreign currency account at YE?
This section of the foreign currency invoicing KB article explains how to journal out currency fluctuations in non-GBP bank accounts. The underlying GBP nominal balance on a foreign currency account in QuickFile will naturally drift over time away from the true value per the exchange rate on a given date, because when you do a cross-currency payment or transfer it only adjusts the underlying GBP balance on the currency account by the same GBP amount as the other side of the transaction (i.e. it uses the exchange rate you specified for the payment rather than the true exchange rate for that day). The loss/gain journal lets you re-value the foreign currency account at the current exchange rate and put the balancing entry to currency charges, so you should do this at least once on your year end date and possibly more frequently at other points through the year.
Thank you, very helpful.
The foreign currency loss that they want to deduct as an expense indicates a 25% gain of USD during the last year, while the actual USD rates has not moved that much. I don’t understand how the loss can be this big. Maybe this indicates that the currency loss has not been correctly accounted for the last few years.
You said they needed to adjust the opening balance, which suggests it was the previous year’s figure that was out - have you been using QuickFile for those previous years’ books or is this the first year you’ve been giving them numbers from QuickFile?
We have used Quickfile from the beginning.
I wonder if they have not accounted for currency gain/loss the other years, that could explain it.
Is there another way of doing it rather than having to take numbers from Quickfile into another system, can Quickfile not make the reports and accounts needed to file without using another system?
They continue to reply that everything is correct including previous years balances and currency gain/loss.
Still I don’t understand where this £30K+ currency loss is coming from this year and it seems incorrect to claim this as an expense. Not sure what else to do now then but to trust the accountant.