Forex Accounting System

The subject of foreign exchange (forex) in our country, due to its significant role in all aspects of the national economy, has always been more scrutinized by authorities compared to the Rial, and it has more extensive laws and regulations. A prominent manifestation of the difference between forex and Rial can be seen in the separate management, processes, and organization of the forex and Rial sections, and even the separation of accounting codes for these two sections in some bank branches.

Given that providing financial services to customers and performing many internal bank operations mainly result in the registration of accounting documents, the extensive nature of the forex subject, as described, necessitates that forex accounting in the bank possesses features that allow for the control and production of financial reports from the provision of forex services to customers, enabling senior bank management to oversee these services.

Additionally, it should allow the Central Bank to monitor banks in the country and obtain the necessary reports from them. Many of these features are unique to forex and do not apply to Rial. As a result, a suitable forex accounting system for the bank must cover the expected functionalities of a financial system in terms of document registration, control, and reporting, as well as specific capabilities unique to the forex domain.

Paying attention to the importance of recording forex amounts alongside the Rial equivalent and conversion rates in forex transactions, as well as performing specific controls in forex accounting documents that must comply with one of the Central Bank’s declared methods, are some of the features expected from a suitable forex accounting system.

This system should be able to apply specific controls to forex documents and provide financial reports specific to this domain. Control of forex balance, accuracy of forex status balances and Rial value separated by each currency, the ability to register transactions with various rate sheets, registering value dates independent of document dates, revaluation operations, and providing forex balance and open forex status reports are among the most important and prominent capabilities expected from a forex accounting system.

Management of accounting titles, including creating a hierarchical structure of accounting titles and defining account details (such as customer number, account number, letter of credit number, and guarantee number), linking created titles with corresponding coding in the bank’s GL and the Central Bank, determining account parameters such as revaluation capability, open item, balance nature, and account type are handled in this part of the system.

Defining accounting document registration instructions for various processes in the form of document templates, including how to register and approve and the number of necessary approvals for each document, the number of articles and specifications of each article including title, debit or credit nature, how to register value dates, inter-unit issued or received status, exchange rate type and rate, how to register forex and Rial amounts, reference type, etc., are features of the forex accounting system. There should be a predefined template for registering all accounting documents (automated and non-automated) in the system.

Accounting documents for all processes are registered in compliance with predefined templates and applying forex and Rial accounting controls, checking the establishment of forex/Rial balance and accuracy of forex status account with the Rial value of transactions, and then approved and finalized by authorized users.

Once approved, produced documents cannot be changed or deleted, and if document editing is required after approval, de-approval by an authorized user or using the document reversal feature is necessary. Documents registered in open item accounts require matching operations, which are performed in this part of the system. Document matching can be done partially or completely based on amount, value date, and reference.

Revaluation can be done daily or monthly in general and for each main account separately based on defined parameters. Revaluation can be performed considering the diversity of exchange rates in accounting documents or calculated and documented based on a specific exchange rate for all transactions.

The account for the Rial value of transactions is adjusted daily based on the corresponding forex status account, and its profit and loss are recorded in a specific title (independent of revaluation results). In addition to daily or monthly operations like revaluation and adjustment, the calculation and issuance of accrued interest and transfer of income and expense documents on the last working day of the year are performed using this system.

Preparing files and financial reports used by other internal and external bank units is the responsibility of this system, and forex balance and open forex status reports are among its main outputs.

The Pooya Forex Accounting System is designed and produced based on a thorough understanding of banks’ forex needs, Central Bank expectations, and over three decades of experience in the international sector of various banks.