Exchange Rates
CCH Trust Accounts holds tables of Exchange Rates. Each table contains the rates from a From currency to a To currency. The currencies are identified by 3 character ISO codes, e.g. USD for US dollar or EUR for euro. To convert an amount in currency ABC to currency DEF the system divides by the exchange rate from ABC to DEF, e.g. to convert an amount from USD to GBP the system divides by the exchange rate from USD to GBP. (N.B. This is different from SecTAX which multiplies.)
Exchange Rates are used in Trust Accounts for two purposes:
- In reports figures often need to be translated. For instance a share price may be quoted in a foreign currency and need to be converted to produce a valuation.
- In multicurrency Data Entry the system stores both the foreign currency value of an entry and its book currency equivalent. The foreign currency value is entered and the system calculates the book currency equivalent using the exchange rate tables. However the calculated figure is only an estimate and for many transactions the figure should be overridden. For instance if there was a transfer from a foreign bank account to a book currency bank account then the actual book currency amount is known and the system’s estimate should be overridden. So each entry stores the actual rate at which the conversion was performed and this can differ from the rate in the exchange rate tables.
How An Exchange Rate is Looked Up
- First, CCH Trust Accounts looks for the exchange rate on the day for which the conversion is required.
- If there is no rate for that day then the system searches backwards through earlier days looking for a figure. There is a limit to how far back it searches, known as the Pricing Range in Days. This is set in Database Parameters. Typically it is 31 or 7.
- If no exchange rate is found then the report uses the Default Exchange Rate. Each table has a Default Exchange Rate. If none has been set then the system stops and requests the Default Exchange Rate.
Note: that CCH Trust Accounts, unlike some systems, does not automatically use the inverse rate if it cannot find a direct rate. However the option Cross Rates performs a similar function (see below).
The Default Exchange Rate
Each exchange rate table has a Default Exchange Rate. The main purpose of the Default Exchange Rate is to avoid long reports stopping in the middle and asking for an exchange rate which would be inconvenient if the report is being run overnight.
However, the Default Exchange Rate has little meaning in practice and it is better to make sure that the exchange rate tables are up-to-date.
Entering Exchange Rates
If many currencies are in use it can take a long time to enter the exchange rates even if this is only done monthly. Some systems can import exchange rates from a text file or a website, but Trust Accounts does not currently support this.
Instead a shortcut is to use an option called Calculate Cross Rates. The exchange rate tables are shown in a grid. The rows are the From currencies and the columns are the To currencies. If a table exists the word Set appears in the grid. The user chooses one column in the grid, e.g. GBP, and enters the exchange rate from each currency to GBP for the required date. This can be done from the newspaper and is quick because the system remembers the date you last entered as you edit each table in turn. When all the rates to GBP have been entered use Cross Rate to calculate all the other rates for that day from the GBP rates. For instance, the system calculates the rate from USD to EUR using the USD to GBP rate and the EUR to GBP rate. In this way all the exchange rates for the day can be quickly entered.
Downloading Exchange Rates
From version 2024.2 the process of downloading exchange rates has changed due to a change of access policy to the Canadian Business School website, fx.sauder.ubc.ca, which CCH Trust Accounts uses to read the table of rates into the exchange rates tables. Direct access to the information is not allowed any more, so it is necessary to open the site in a browser and copy the rates which are in a csv format.
This means that the Download option now opens the website and asks you to copy the contents into a new text file that you create on your computer. When the website is opened it is at the correct page with the required exchange rates displayed. On Chrome the user can save them to a text file using Control-S.
CCH Trust Accounts then asks you to browse to the file and imports the contents.
If you have more than 10 currencies that you are converting from, you are asked to repeat the procedure for each set of 10 currencies.
Due to the change in access permissions the automatic download process will not work at all in earlier versions of the software.