Foreign Currency Exposure Capture and Validation

Today's accounting systems (if properly designed) can produce accurate reports, but they are only as good as the data entered into them. Strong internal control policies, such as reconciling intercompany balances in both underlying foreign currency and reporting currency amounts, will reduce the risk of hedging the wrong amounts. The appropriate personnel must regularly review these reports to validate the data and investigate unusual or unexpected foreign currency exposures. Maintaining accurate information about your foreign currency exposures will improve, with time and practice.
To help with the data capture process and identify previous foreign currency exposures, review the current gains/losses in your foreign currency general ledger account. You may also consider natural hedging offsets and strategic techniques for managing foreign exchange exposures over the longer term, such as moving some of your production to your larger sales markets so you can match the currency of your costs and revenues.
Keep in mind: in today’s world of outsourced solutions (Chinese manufacturing, accounting departments in India, and so on), certain strategic decisions may require long-term currency hedges to protect longer term outsourcing decisions.