When the revenue recognition ends on 30.11 and you also have posting date 30.11, the exchange rate should not use the actual positing date (2nd December).
In this example (which are using actual currencies from the actual period), this contract has a difference in contract value on 40735 USD because the exchange rate is using 2nd December instead of 30th november. This is making wrong accruals and many contracts with high amounts make very high differences in accruals than would be in the fiscal period end.
Business impact:
The issue of incorrect contract value calculations in fixed-price contracts denominated in foreign currency poses significant financial and operational risks. Specifically, when posting revenue recognition, the exchange rate for these contracts is inaccurately applied, as the rate from December 2nd is used instead of November 30th.
This discrepancy resulted in a $40,735 USD variance in the contract value for a single example, leading to incorrect accruals. When scaled across multiple contracts, particularly those with substantial values, the impact becomes materially significant. Such discrepancies distort financial statements, compromise the accuracy of fiscal period-end reporting, and could lead to regulatory non-compliance or audit findings.
Furthermore, the issue introduces inefficiencies as teams may need to perform manual corrections, increasing workload and the risk of errors. Addressing this problem promptly is crucial to ensure the integrity of financial reporting, maintain stakeholder confidence, and reduce operational inefficiencies.
Please refer to the work item 979192.