Our Foreign Exchange Management Policy provides organizations with a strategic framework to navigate the complexities of foreign exchange transactions. Designed to minimize risks and optimize operations, this tool equips organizations with essential guidelines for managing currency exposures, ensuring compliance with accounting standards and safeguarding financial stability. By addressing key challenges in foreign exchange management, it empowers businesses to maintain control over transaction costs, reduce losses and make informed decisions that align with their operational goals.

This tool includes three samples, each tailored to different aspects of foreign exchange management. Sample 1 focuses on establishing policies to minimize foreign exchange losses, manage balance sheet exposures and define the authority of committees overseeing hedging strategies. Sample 2 emphasizes uniform procedures for recording and translating foreign currency transactions, ensuring consistency and accuracy across subsidiaries. Sample 3 provides detailed accounting guidelines for foreign currency transactions, including definitions, translation processes, and rules for handling assets, liabilities and hedging practices.  

Sample procedures include:

• The Foreign Exchange Committee, as authorized by the Board of Directors, is solely responsible for determining which balance sheet and economic exposures to hedge, as well as identifying directions that are not economically feasible to hedge.
• Corporate Accounting is responsible for maintaining a functional currency questionnaire to determine the functional currency for recording purposes.
• All transactions must be entered into the accounting system in the currency in which they are denominated.
• Foreign currency transactions must be recorded in the financial statements by translating the foreign currency amounts into the entity's functional currency using the exchange rate in effect on the transaction date.