Ideas for the Mambu Banking Engine

Daily revaluation of balances held in currencies other than the instance base currency

What: Daily (typically EoD) revaluation of balances held in currencies other than the base currency to their value in the instance base currency.

E.g. deposit balances in GBP needs to be converted to the instance based currency which is EUR (i.e. reevaluated), based on the daily revaluation FX rate for accounting purposes

  • If Client1 today has a balance of 500 GBP and today's conversion rate GBP to EUR is 1:1.15 (i.e. 1 GBP is worth 1.15 EUR), then the EUR balance in accounting representing liability to John is = 575 = 500 * 1.15

  • If tomorrow the conversion rate GBP to EUR is 1:1.10 (i.e. GBP value drops and 1 GBP is worth 1.10 EUR), then the EUR balance in accounting representing liability to John is = 550 = 500 * 1.10

  • In accounting, in the night from today to tomorrow, this would be reflected with the following JEs:

    • Dr Liability (Savings Control) 25

    • Cr FX Gain 25

Why: For marking to market purposes, i.e. reflecting value of client deposit balances/ loans receivable held by an organisation in their value as of "today", which will be determined by today's FX rate. Otherwise, the balances in the base currency used for accounting purposes will be reflected in their historical values, which will not correctly represent their current market value, which may be substantially higher or lower, depending on the FX rates fluctuations.

  • Dorota Nosal
  • Jul 16 2019
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