Automatic Foreign Currency Revaluation in Financial Reports

If your organization works with accounts or balances in foreign currencies, the value of these balances may change when they are presented in your organization’s base currency due to exchange rate fluctuations. Wafeq’s automatic foreign currency revaluation feature helps you reflect the impact of these changes in your financial reports, without manually calculating currency differences at the end of each period.
 

Once this feature is enabled, Wafeq automatically revalues foreign currency account balances, then displays the exchange rate differences in the related financial reports, such as the balance sheet, Profit and Loss statement, trial balance, cash flow statement, and revaluation report.
 

Before you start: When does foreign currency revaluation appear in reports?

The automatic foreign currency revaluation feature is disabled by default in Wafeq.

Therefore, revaluation adjustments will not appear in financial reports until the feature is enabled from the organization settings by a user who has permission to access reports.

After the feature is enabled, currency differences are calculated automatically when the related financial reports are generated. If the feature is disabled, these adjustments will no longer appear in the reports.

Note: Automatic revaluation does not create journal entries in the general ledger. Currency differences are calculated automatically when reports are generated.
 

Automatic revaluation applies to the following accounts when they have foreign currency balances:

• Foreign currency bank accounts.
• Accounts receivable.
• Accounts payable.
• Payroll payable accounts.
  
   

Enable automatic foreign currency revaluation

To enable automatic foreign currency revaluation for your organization:

1. Click the "organization name" from the main menu, then click "Organization Settings".
2. Go to the "Preferences" section and click "Edit".
   
   
    
3. Enable "Automatic Revaluation".
4. Click "Save".

Review currency differences from the revaluation report

After enabling the feature, you can use the revaluation report to review foreign exchange revaluation differences for each account and currency.

This report is a key source for understanding the revaluation amounts that later appear in financial reports, such as the balance sheet, Profit and Loss statement, and trial balance.

The revaluation report helps you:

• Review the impact of exchange rate changes on each foreign currency account.
• Verify the revaluation amounts shown in financial reports.
• Understand your organization’s total unrealized foreign exchange exposure.
   

View the foreign currency revaluation report

To open the report:

1. Click "Reports" from the main menu.
2. Go to the "For Accountant" section.
3. Click "Foreign Currency Revaluation".
   
   
   
    

Wafeq displays the accounts that have foreign currency balances and shows how the value of these balances changed when presented in the organization’s base currency.
 

The main idea of the report is to compare two values:

Book value: The value of the balance as recorded in the books, based on the historical exchange rate or the rate used when the transaction was recorded.

Revalued balance: The value of the balance after applying the exchange rate used on the report date.

The difference between these two values appears in the report as the impact of the exchange rate change.

 

Report columns

• Balance: The balance amount in the foreign currency itself, such as 10,000 EUR or 1,000,000 EGP.
• Book value: The value of this balance in the organization’s base currency before revaluation, based on the rate used when the transaction or balance was recorded.
• Exchange rate: The rate used in the report to revalue the balance.
• Revalued balance: The value of the balance after applying the exchange rate on the report date.
• Realized gains/losses: An exchange difference resulting from an actual transaction, such as collecting an invoice or paying a bill at an exchange rate different from the original rate.
• Unrealized gains/losses: The revaluation impact on foreign currency balances before they are settled. When the balance is collected or paid, this impact may appear in the opposite direction of the realized gain or loss because the balance is no longer open.
• Foreign exchange exposure: The total impact of exchange rate changes on the open foreign currency balance up to the report date. This number shows how much the account is exposed to exchange rate fluctuations and may differ from the period’s gains or losses because it reflects the accumulated impact on the open balance.

Where do revaluation results appear in financial reports?

After the foreign currency revaluation report shows the source of currency differences, the impact is reflected in the financial reports related to foreign currency accounts.

Balance sheet

Accounts that include foreign currency balances appear with a special revaluation icon. When you hover over the icon, Wafeq shows the revalued balance details, such as the currency, exchange rate, revalued balance, and the difference added to or deducted from the closing balance.

The offsetting impact of the revaluation also appears under accumulated unrealized gains and losses in the equity section, so the balance sheet remains balanced.


 

Profit and Loss

Revaluation differences appear in the Profit and Loss statement under unrealized gains/losses. This line shows the impact of exchange rate changes during the period. It does not come from journal entries in the general ledger; it is calculated when the report is generated.

Trial balance

The trial balance shows the revaluation impact through additional columns that display the balance before revaluation, foreign exchange adjustments, and the balance after revaluation. This helps you track the difference between the book balance and the balance after applying the exchange rate.

Cash flow statement

When using the indirect method, the impact of unrealized currency differences appears within operating activity adjustments. This shows the effect of exchange rate changes without treating it as an actual cash movement.

Disable automatic revaluation

You can disable automatic revaluation from the organization settings at any time. When disabled, revaluation adjustments will no longer appear in the related financial reports.