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Dynamics 365 Community / Forums / Finance | Project Operations, Human Resources, ... / Preventing and Correct...
Finance | Project Operations, Human Resources, ...
Answered

Preventing and Correcting Unexpected FX Revaluation in Ledger Settlement

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Posted on by ST-13020852-0 44

Issue :

  • In our USD company, we posted a GBP debit transaction in June 2023.
  • We later cleared it in USD in September 2023 using Ledger Settlement.
  • When we ran the 31/12/2023 FX revaluation, no adjustment was posted, as expected.
  • However, after running the Opening Transactions function in 2024, the GBP amount was brought forward, even though its USD equivalent had already been cleared.
  • When we ran the FX revaluation on 01/02/2024, the system unexpectedly recalculated the USD equivalent of GBP and posted an FX adjustment.

Our Questions:

📌 How can we prevent this issue in the future so that no unnecessary FX adjustments are posted after the opening transactions?
📌 What is the correct corrective action in 2024 to fully clear the transaction and ensure accurate financial reporting?

Categories:
Microsoft Dynamics AX
I have the same question (0)
  • ST-13020852-0 Profile Picture
    ST-13020852-0 44 on at
    Here is a screenshot of the postings done.
    as you can see the first two postings were settled between them in 2023
     
     
     
  • Verified answer
    BillurSamdancioglu Profile Picture
    BillurSamdancioglu 19,856 Most Valuable Professional on at
    You can dısable the feature of FX calculatıon on settlement but ın thıs case non wıll be calculated.
  • ST-13020852-0 Profile Picture
    ST-13020852-0 44 on at
    -Why did the system bring forward the transactions  even though they were settled  before year-end?
    -Is this standard behavior for the Opening Transactions function, and how does it determine which balances to carry forward?
    -What is the best way to prevent this from happening in the future to ensure no incorrect FX adjustments are posted?
  • ST-13020852-0 Profile Picture
    ST-13020852-0 44 on at

    Hello everyone,

    I’m facing an issue with ledger settlement and the handling of opening transactions in a multi-currency environment, and I’d appreciate any insights on whether the suggested approach is correct.

    Scenario:

    • My company’s accounting currency is USD.
    • I posted a General Journal in SGD on 01/06/2024:
      • Dr Prepayment (Balance Sheet Account)
      • Cr Bank
    • Later, I cleared the entry on 01/09/2024:
      • Dr Expense Account (Profit & Loss)
      • Cr Prepayment (Balance Sheet)
    • I then used Ledger Settlement to match these transactions.
    • After this, my Trial Balance for 2024 correctly shows a 0 balance.
    • When I ran the Opening Transactions functionality for 2025, the system brought forward both transactions as follows:
    Date Year Closed Type Currency Amount in Transaction Currency Accounting Amount Amount in Reporting Currency
    01/01/2025 No Opening USD -531 -531 0
    01/01/2025 No Opening SGD 752.15 531 0

    Suggested Fix:

    It was recommended that I:

    1. Use Ledger Settlement during the year to match transactions.
    2. At year-end, create a manual journal entry to reverse and repost with a manually adjusted exchange rate to avoid issues with opening balances.

    Question:

    • Is this the correct approach?
    • Would there be a better way to handle this scenario to ensure that opening balances don’t bring forward unmatched FX differences?
    • How do you typically handle this type of multi-currency opening transaction issue
  • Suggested answer
    Abhilash Warrier Profile Picture
    Abhilash Warrier 6,138 Super User 2025 Season 2 on at
    Hi,
    You can try the below approach as well –
    1. Settle Transactions Before Year-End:
      • Best Practice: Always settle related transactions in Ledger Settlement before closing the fiscal year. This ensures that any FX gain/loss is recognized in the correct period and does not roll forward unexpectedly.
      • Steps: Go to General Ledger > Periodic Tasks > Ledger Settlements. Match the prepayment and expense transactions completely before year-end. Ensure that all FX revaluations are posted before closing
    2. Run Foreign Currency Revaluation:
      • Addressing FX Differences: Before year-end closing, run Foreign Currency Revaluation to adjust for any FX differences properly.
      • Steps: Navigate to General Ledger > Periodic > Foreign Currency Revaluation. This will help ensure that any FX differences are accounted for correctly.
    3. Manual Journal Entry:
      • Suggested Fix: Create a manual journal entry at year-end to reverse and repost transactions with a manually adjusted exchange rate. This can help avoid issues with opening balances.

    Enable Advanced Awareness Options:
    • In Dynamics 365 Finance, enable the advanced awareness options for ledger settlement and year-end close. This feature helps manage FX differences and ensures accurate opening balances.

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