Foreign Currency Revaluation: AS 11 Month-Close Working File
Foreign currency balances move even when no cash moves. Month-close should revalue monetary items and explain realised and unrealised exchange differences.
For the connected rule, example or next step, see Income-tax Rule 206: Exchange rate for conversion of foreign-currency income.
Detailed analysis
AS 11 deals with effects of changes in foreign exchange rates. For finance teams, the key control is identifying foreign-currency monetary items, applying the correct closing rate and posting exchange gain/loss consistently.
Practical example
A startup has USD 50,000 customer receivable recorded at ₹83/USD. Closing rate is ₹84.20/USD. Finance revalues receivable, records unrealised gain, and separately tracks actual gain/loss when customer pays.
Evidence and control checklist
| Area | What to check | Evidence to save |
|---|---|---|
| Foreign-currency balances | Customers, vendors, bank, loans and advances. | FX ledger and currency-wise ageing. |
| Rate source | Closing rate and transaction rate policy. | Rate screenshot/source and policy note. |
| Revaluation working | Balance x closing rate vs book value. | FX revaluation sheet. |
| Realised vs unrealised | Settlement gain/loss vs period-end revaluation. | Bank receipt/payment and journal entries. |
| Review and disclosure | Material movement and P&L impact. | Controller review and audit schedule. |
Common mistakes
- Revaluing all balances without checking monetary/non-monetary nature.
- Using random exchange rates.
- Mixing realised and unrealised gain/loss.
- Ignoring foreign-currency bank balances.
- No rate source saved.
Official reference framework
Based only on official India Code, MCA and ICAI source pages listed below. Check the latest Companies Act, Schedule III, accounting standards, Ind AS/AS applicability and auditor guidance before closing or filing.
Official sources used
This article is intentionally source-limited to official India Code, MCA and ICAI material. Source validation date: 17 June 2026. Verify final positions with latest Companies Act, Schedule III, accounting standards, Ind AS/AS applicability and auditor guidance before closing or filing.
- MCA: Accounting Standard (AS) 11 Effects of Changes in Foreign Exchange Rates
- ICAI: Accounting Standards as on February 1, 2022
- India Code: Companies Act, 2013 Section 128 - Books of account
- India Code: Schedule III to the Companies Act, 2013
FAQs
Restating foreign-currency monetary balances at closing rate.
Foreign-currency monetary items like receivables, payables, loans and bank balances.
Gain/loss on actual settlement.
Period-end revaluation impact before settlement.
FX ledger, rate source, working and journal entry.
Source and review trail
Use the current official instrument, portal or regulator publication before acting. This panel separates the category authority from page-specific references.
- Primary category
- Investments & Markets
- Official starting point
- www.sebi.gov.in