How to run foreign currency revaluation with an AI agent

Revaluation is a calculation with two judgements around it: which balances are monetary, and which closing rates to use. A person approves both. The agent then selects the balances, applies the rates, computes unrealised gains and losses, compares its result with the ledger's own revaluation run, and drafts or checks the journal. The accountant approves the journal before it posts.

What is foreign currency revaluation, and who owns it?

At each period end, balances held in foreign currencies are restated into the entity's functional currency at the closing rate. Monetary items, such as cash, receivables, payables and loans, are revalued; the difference is an unrealised exchange gain or loss in profit. Non-monetary items, such as inventory, fixed assets and prepayments, generally stay at the historical rate. Some ledgers revalue automatically; many teams still check or calculate it in a spreadsheet.

The general ledger accountant usually owns revaluation. The financial controller approves the rate source and the policy, including whether revaluation journals reverse at the start of the next period. Treasury may supply rates. Whether an agent can handle foreign currency revaluation is mostly a question of getting those two judgements fixed in writing.

What does the agent prepare?

1. Agent, depth 1: loads the rate set. Closing rates for the period from the approved source, at the approved time of day.
2. Person, accountant: approves the rate set. Especially where a rate looks unusual or a currency was illiquid on the day.
3. Agent, depth 1: selects balances. Foreign currency balances on accounts flagged as monetary in the account list, by entity and currency.
4. Agent, depth 1: computes revaluation. Foreign amount at closing rate, less carrying amount in functional currency, by account.
5. Agent, depth 1: compares with the ledger. Where the ledger runs its own revaluation, the agent's result is compared line by line and differences explained.
6. Agent, depth 2: drafts the journal. Or, where the ledger posts it, reviews the ledger's proposed journal. Includes reversal date if policy requires it.
7. Person, accountant: approves and posts.
8. Agent, depth 1: checks after posting. Functional currency balances of revalued accounts equal foreign amounts at closing rate.

What does the named person approve, and what evidence remains?

The accountant approves the rate set and the journal. The controller approves, once and on change, the list of monetary accounts and the reversal policy. These approvals are where errors are stopped; the arithmetic in between rarely goes wrong.

Approved rate source. Evidence: rate set with source, time and approver.

Monetary account flags. Each foreign currency account is flagged monetary or non-monetary, under change control. Evidence: the flag list version.

Comparison with the ledger. Evidence: line-by-line comparison and explanations.

Journal approval. Evidence: approver identity.

Post-posting check. Evidence: the check result.

What does a revaluation look like for one account?

Take an illustrative sterling-functional company with a dollar receivable of 500,000 booked at 1.25 dollars to the pound, carried at 400,000 pounds. The approved closing rate is 1.28. At that rate the receivable is worth 390,625 pounds, so the agent computes an unrealised loss of 9,375 and drafts the journal. On a dollar prepayment of 50,000 on the same entity it does nothing, because the account is flagged non-monetary.

Where does it usually go wrong?

Non-monetary items revalued. Prepayments, inventory and fixed assets are revalued because they sit in a foreign currency account. This creates gains and losses that should not exist. Prepayments are a common case; their release is handled in prepayment amortisation schedules, at the historical rate.

Wrong rate time. Rates taken at a different time from policy, or from a different source than treasury uses. Use one approved source for both.

Double revaluation. The ledger revalues automatically and someone also posts a manual revaluation journal. The agent's comparison with the ledger catches this.

Reversals missed or doubled. If policy reverses revaluation each period, a missed reversal compounds. If it does not, an accidental reversal undoes a correct entry. The agent checks reversal status before drafting.

Intercompany balances. Both sides revalue, often at different rates or times, creating intercompany differences. Use the group rate set for both.

Rates for closed markets. Period end falls on a holiday in one currency's home market, and no closing rate is published. The policy should say which rate to use, and the agent should flag the substitution rather than pick one.

Hedges forgotten. Where balances are hedged, the hedge's revaluation should offset. Whether an agent can hedge foreign exchange exposure is a separate matter; here it should only check that hedge revaluation and exposure revaluation use the same rates.

What should you measure?

• Differences between the agent's and the ledger's revaluation.
• Accounts with changed monetary flags. Every change is reviewed.
• Post-close corrections of revaluation entries.
• Time from rate availability to posted journal.

Where Pryme fits

In Pryme, loading rates, computing revaluation and drafting the journal are separate capabilities, each certified on your own past period ends. The approved rate set arrives as a signed source and ledger balances as sealed, so every gain or loss shows its inputs. The journal is held for the accountant and every verdict is filed. The finance bounds are in AI agents for finance.