collection (gains) or disbursement (losses), as
applicable. All gains or losses will be charged or
credited to the appropriation Gains and Deficiencies on
Exchange Transaction, 17-6763. The proper
accounting procedures for documenting gains and
losses are shown in figure 5-3.
In countries where the rate of exchange is not
established by agreement between the U.S.
Government and the foreign country, the DO does not
have to revalue these currencies. Instead, the DO
expends them from the accounts by using the average
purchase rate of the currency on hand. However, in
countries without an established rate of exchange,
changes in value may often occur. What happens when
a DO must increase the amount of foreign currency on
hand by purchase, collection, or transfer from another
DO at a rate of exchange that is different from the rate
the DO is currently using? In these cases, the DO must
compute and use a new average purchase rate. No gain
Average Purchase Rate
If possible, the average value of foreign currency
on hand should be determined at the beginning or end
of the business day.
To determine the average purchase rate, the DO
adds the U.S. dollar equivalent value of the foreign
currency on hand (before the new acquisitions) to the
U.S. dollar equivalent value of the additional foreign
currency received. This total is divided into the new
total of foreign currency units on hand.
A certificate of change in average purchase rate,
similar to the example shown in figure 5-4, must be
prepared and signed by the DO or deputy. The
certificate should be submitted with the Statement of
Accountability, SF 1219.
You have just read about revaluations based on
official rates of exchanges and those caused by
unofficial fluctuations. In the following section, we
will look at the various ways a DO can use to dispose
or loss will result from these transactions.
of foreign currency.
Figure 5-3.Accounting data for gains and losses in foreign currency transactions.