Revaluation Excludes a Payables Account and an Auditor Wants a Closed Period Reopened
Arboria EU keeps its primary ledger in EUR and carries payables balances in USD and GBP. At the September close, the controller runs revaluation on the payables accounts and receives a journal showing an 18,400 EUR unrealized gain. However, the trade payables account 2210 shows no revaluation line even though it holds open USD invoices, while a clearing account that should not be revalued does. The revaluation definition was set to no reversal, and nobody reversed the August revaluation either, so the controller is unsure whether September's result double-counts. Meanwhile, the September period is closed and October is open. The auditor has identified a 62,000 EUR error in September revenue and wants September reopened to correct it at source. The controller has also asked whether the revaluation should be run again after the correction.
1. Why did revaluation skip trade payables 2210 while revaluing a clearing account? What determines whether an account is revalued?
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Revaluation does not sweep the whole trial balance. The revaluation definition names the accounts or account ranges to be revalued and the gain, loss, and any reversal accounts to use; an account outside that definition is ignored no matter what currency it holds. So the first check is whether 2210 is in the revaluation account range and whether the definition's account selection uses a parent or range that actually includes it. The second check is whether the balances are genuinely foreign-currency balances: revaluation converts entered-currency balances into the ledger currency at the period-end rate, so an account holding only EUR entries has nothing to revalue, while a clearing account with USD activity will be picked up if it was mistakenly included. The clearing account appearing is therefore a configuration error, not a surprise: it was named in the definition. Fix the account selection to include 2210 and exclude the clearing account, rerun in a test period, and confirm the result against a manual recomputation of open USD items at the closing rate.
2. Can September be reopened for the 62,000 EUR correction? If not, what is the correct treatment, and what does that mean for the revaluation?
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Reopening is constrained. A period that has been permanently closed cannot be reopened at all, and reopening generally works only while later periods are still open; if October has already been closed, the window has usually passed. Check the period status in Manage Accounting Periods and attempt the reopen only if September is merely closed, not permanently closed. If reopening is not possible, do not backdate a journal into a closed period. Post the correction in October against a clearly identified prior-period adjustment or retained-earnings account, disclose the amount and nature, and keep the audit trail to the original September error. On revaluation, run it after all October adjustments, including the correction, are posted, because revaluation works on the balances as they stand. If September is reopened, reverse the September revaluation first, post the correction, and revalue again so the gain is computed on corrected balances rather than on a mix of old and new.
3. The revaluation definition is set to no reversal and August was never reversed. What is the risk, and how should the definition be changed?
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Revaluation writes an unrealized gain or loss into the ledger at the closing rate. If that entry is not reversed, the next period starts with the prior rate already baked into the ledger-currency balance, and revaluing again at the new rate compounds the two effects. The result is a gain or loss that cannot be tied back to the rate movement of the current period, and the balance sheet carries an unrealized adjustment that should have unwound. Change the definition to reverse in the next period and use a dedicated unrealized gain or loss account so the reversal is visible. For the current backlog, do not simply switch the flag and rerun: identify the August and September revaluation journals, reverse the un-reversed August entry in the current period with a clear description, and then revalue. Reconcile the account afterward by recomputing open foreign-currency items at the closing rate and comparing to the posted balance.