Canada Adding multi-currency to an accounting program

[DanCooperstock]

I'm the business owner and lead author of an accounting program for churches, charities and non-profits (ACCOUNTS from Software4Nonprofits.com) that currently only handles a single currency in each organization's database.

I'm considering adding multi-currency features (possibly only for US$ and Canadian$), but have a lot of questions about how that should be done, including where we get the exchange rates from, whether it matters if we use buy or sell exchange rates, how often to get those rates, and how exactly those rates are applied to transaction amounts entered in the secondary currency to create a unified Income Statement or Balance Sheet in the primary currency.

If anyone can give me any ideas or point me to authoritative resources I would be very grateful.

 

[Dave In Capital]

I wouldn't want to narrow your options for forex intermediaries by suggesting any. I think a search engine with the applicable key words would serve you best. Some forex platforms offer continual updates, while others provide rates at the time of the transaction.

The method for buy v. sell rates is to record receivables and assets received at the spot buy rate, and vice versa. The intermediary will be buying the foreign currency from you when you've received the asset, and will be selling you the foreign currency to you when you pay a debt.

For financial reporting purposes, IAS 21 provides guidance:

"[T]he rate used is that at which the future cash flows represented by the transaction or balance could have been settled if those cash flows had occurred at the measurement date."

So, when preparing a balance sheet the receivables would be converted using the buy spot rate, and payables using the sell spot rate.

 

[DanCooperstock]

Thank you very much, that should be helpful.