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Foreign Currency

Only a handful of middle market products handle foreign currency completely in compliance with FASB 52. If you need foreign currency features, a summary of these features for selected accounting software products is listed below:

  FASB 52-Compliant Foreign Currency Supported in General Ledger Foreign Currency Supported in Accounts Payable Foreign Currency Supported in Accounts Receivable Foreign Currency Supported in Inventory Euro-Compliant Supports Foreign Languages
For the low-end market
BusinessWorks Gold 2.4 No No No No No No No
M.Y.O.B.  No No No No No No No
One Write Plus No No No No No No No
Peachtree 2000 5.0 No No No No No No No
Peachtree for Windows 7.0 No No No No No No No
Peachtree Complete Accounting
2003
No No No No No No No
QuickBooks 2000 No No No No No No No
QuickBooks Pro 2000 No No No No No No No
For the middle market
ACCPAC Advantage Series 
(Enterprise Edition)
Yes Yes Yes Yes Yes Yes Yes
Microsoft Dynamics 7.0 Yes Yes Yes Yes Yes Yes Yes
Macola Progression No No Yes Yes No Yes Yes
MAS 90 and MAS 200 No No* No* No* No* No No*
Navision Attain (Microsoft) Yes Yes Yes Yes Yes Yes Yes
Platinum for Windows by Best Yes Yes Yes Yes Yes No Yes
ACCPAC Professional 
Series 5.0
No Yes Yes Yes Yes No No*
iScala 2.1 Yes Yes Yes Yes Yes Yes Yes
Solomon IV 5.0 (Microsoft) Yes Yes Yes Yes Yes Yes No*
Traverse 9.0 No* No* Yes Yes No No Yes
Visual AccountMate 4.0 No* No* Yes Yes No No Yes
For the beginning ERP market
Axapta (Microsoft) Yes Yes Yes Yes Yes Yes Yes
ACCPAC Executive Series  No Yes Yes Yes No* No  
MAS 500  Yes Yes Yes Yes Yes No No*
Microsoft eEnterprise 7.0 Yes Yes Yes Yes No* Yes Yes
Epicor eFinancials Yes Yes Yes Yes Yes Yes Yes
Macola Progression 7.5 (Exact) No No Yes Yes No Yes Yes
SAP Accelerated Financials R/3 Yes Yes Yes Yes Yes Yes Yes
Solomon IV 5.0 (Microsoft) Yes Yes Yes Yes Yes Yes No*


A Brief Discussion About Foreign Currency Features

The international marketplace has never been stronger, and the Internet is making that huge market more accessible to even the smallest enterprises. Companies with Web sites suddenly find prospects from halfway around the world can order their products as easily as a customer down the street. Businesses that have never dealt with any currency other than the U.S. dollar are finding they must contend with pounds and rubles and yen and euros, and for the first time they must consider the need for accounting software that supports foreign currency transactions and reporting. Such support is more difficult than it first appears.

Only a handful of accounting packages process multiple currencies in compliance with FASB Statement no. 52, Foreign Currency Translation, Statements of Standard Accounting Practice 20 (the United Kingdom and Canadian authoritative pronouncement), International Accounting Standard 21, Accounting for the Effects of Changes in Foreign Exchange Rates (the IASC's authoritative pronouncement), or the European Community EC Directives 4 (Annual Account of Certain Types of Companies) and 7 (Council Directive on Consolidated Accounts).

The accounting software packages with the strongest international features are currently produced by ACCPAC International, Axapta, Navision Attain, SAP, Epicor eFinancials, Great Plains and Solomon. Unfortunately, many other packages don't provide multiple currency support at all, don't support it fully or don't support it in all relevant modules.

From a balance sheet reporting perspective, accounting for fluctuations in exchange rates became much easier in 1981 when FASB Statement no. 52 called for using the current exchange rate to compute both the value of the assets (and liabilities) and the related accumulated depreciation.

However, other foreign currency computations can be more involved. For example, the value of inventory held in foreign warehouses must be restated each reporting period when fluctuating exchange rates result in the recognition of an unrealized gain or loss. Further, international sales transactions that take place often aren't processed until several minutes (or several hours) later, resulting in a gain or loss due to fluctuating exchange rates. Those adjustments also must be considered when restating data in foreign currencies.

To handle these complexities, Platinum's multiple-currency module provides a screen to input the daily exchange rate for each relevant foreign currency. In that way, users can toggle between converting U.S. dollars to the foreign currency and converting the foreign currency back to dollars. Platinum for Windows by Best can even deal with budgeted exchange rates, producing reports that show the effects of favorable and unfavorable exchange rate fluctuations.

Some smaller international companies attempt to avoid the complexities of foreign currency translation by offering goods for sale only in their base currencies and by accepting only credit card payments from international customers. With this strategy, they account for all receivables in U.S. dollars and the credit card company converts all revenue to U.S. dollars before receipt. While it may minimize the materiality of fluctuating currencies, this strategy doesn't avoid the problem completely because transactions are seldom transacted and consummated simultaneously.

Beginning in 2002, the new euro coins and notes entered circulation, and all EU businesses must use the euro as their local currency. Currently, 12 countries are participating in the conversion to the euro : Belgium, Germany, Greece, Spain, France, Ireland, Italy, Luxembourg, The Netherlands, Austria, Portugal, Finland. Therefore, if you plan to do business in Europe, your accounting software should be euro-compliant. 

 

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