Setting an exchange rate policy

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Set an exchange rate policy for your organization if you operate in multiple counties. Based on the exchange rate policy, currencies are converted into your reporting currency.

IBM® Envizi ESG Suite provides two options for setting the exchange rate for currencies:

Single
A single exchange rate is used for each currency at the end of the reporting period to convert all costs in the reporting period. For some currencies, the exchange rate is recorded daily. The latest exchange rate of the month is always used. For example, if the end of the reporting period is April 2023, the exchange rate that is recorded on 30 April with the latest timestamp is used for all costs in the reporting period. If the reporting period spans February to April, the exchange rate with the latest timestamp that was recorded on 30 April is used for the entire period. The single policy is also referred to as an inventory model.
The advantage of the single exchange rate policy is that the policy is easy to understand and makes auditing easier. It provides a good indicative number of the final cost for the specified currency. The disadvantage is that it is less accurate because currency exchange rates fluctuate.
Historical
Historical monthly exchange rates are used for currency conversions. The last exchange rate that is recorded in each month is used to convert costs in the corresponding month. The historical option is more accurate than the single option because the rate of the corresponding month is used and this rate reflects currency fluctuations from month to month. Because exchange rates differ per month, auditing is more difficult than with the single option.

With the historical option, the rate is defined as the rate that has the latest effective on date within each month. For example, November 2023 has 2 rates for converting from AUD to USD. One rate is effective on the 25 November and one is effective on the 30 November. The latter is used for cost conversions because it is the most recent rate for the month of November.

Note: When new organizations are set up, the default option is historical.
To select an exchange rate policy option, an administrator completes these steps:
  1. From the main menu, select Admin > Organization Preferences.
  2. On the Reporting and Dashboard tab, set Currency Exchange Rate to either Single or Historical.
  3. Click Save.