Foreign Travel Accounting

2785 views 4 replies

Narasimha Rao

53 Points Joined March 2007

Hi all,

We have frequent employee foreign travels. We have been purchasing foreign currency and paying them as an advance. After return, we are booking expenditure with the currency on the date of submission & deducting the advance paid in INR. Due to which there is a loss/gain to the employees on the travel. When a loss comes i am facing problems from the staff & not able to explain them.

Example:

A went on USA business tour for 10 days. The advance paid 500 USD ( @ Rs. 44/-) & advance booked as Rs. 22,000/- in the accounts. After 10 days, A submitted bills of 700 USD and claiming 200 USD as payable after advance adjustment. The current rate is Rs. 43/-.

My treatment as below:

Total Expenditure (700 * 43) Rs. 30,100/-

(Less) Advance paid Rs. 22,000/- (sothat the advance becomes zero)

Balance payable Rs. 8100/-

Employee treatment as below:

Total Expenditure USD 700

(Less) Advance paid USD 500 (the advance would not be zero as 500*43=21500)

Balance payable Rs. 8600/- (200 * 43)

Which one is correct & advisable? And we have a policy of tour allowance of 10 USD per day also. I have been calculating the allowance as on the date of submission of travel bill which is being objected by the employees. Can any one suggest me a way to solve this problem in a win-win situation, please?

Best Regards

Singh

Replies (4)

info_track

16 Points Joined March 2007

Dear Mr. Singh, Just paid him the amount he had actually made to buy these Extra 200 USD. Due to the involvement of Foreign currencies there must be an evidence of buying these Extra 200 USD. In case if he made the payment by his Credit Card ,then you will find the amount in the Card Statement and make a Photocopy for your record purpose. And as per the your company policy for Allowance of USD 10 per day. For this treatment you have to make payment @ current rate or date of his joining or the date of submission of expenditure bill or Average rate of his depart & arrival date . I hope you like all these suggestion. Thanks & Best Regards Manmohan Singh

Narasimha Rao

53 Points Joined March 2007

Thanks, Actually the extra 200 USD might have happend on different dates with different denominations & also may be without bills. In fact it would be very difficult to calculate the rates on various date if it is bulk. What date currency is advisable? & what the companies are doing in this situation...

Guest

429580 Points Joined August 2012

hi, I think the employee's calculation is more right. Suppose the employee buys 200 USD at more than 43 Rs - say 44 Rs. As per his calculation He will be paid 200 * 43 = 8600 Rs.Even as per his calculation he will sustain a loss of 200 * 44 = 8800 (Buy) 200 * 43 = 8600 (Claim) loss to him = 200 Rs Your calculation will give him a even greater loss 200 * 44 = 8800 (Buy) 8100 (What you pay - as per your calculation) Loss to him = 700 Rs What is wrong with your calculation is that you are trying to make the employee bear the foreign exchange loss 500 * (44-43) = 500. (8600-500=8100). Naturally the employee is objecting. Another situation is what if the employee brought the dollars at less than the closing rate of 43 Rs - Say 40 Rs. 200 * 40 = 8000 (Buy) 200 * 43 = 8600 (Claim) GAin to him = 600 Rs. This situatuion is also unacceptable as he is gaining. The auditors will ask. Therefore you have no other alternative but to work out actuals. Otherwise what you can do is USE AN AVERAGE RATE. That will be a win win situation as far as I can see. Tell me if this is useful to you. Bye.

Guest

429580 Points Joined August 2012

Even using an average rate there will be a loss/gain situation. But the thing is it will reduce the margin of gain or loss. At best it can be an acceptable compromise. bye.