FX Rates/Share Releases

wilsom04

I received a file from the UK using a date release FX rate of 1.85. The day the money was transferred the FX rate was 1.6. They told me to use the 1.85 rate for W2 purposes and reporting and that I have to true up the difference.

How am I supposed to do that? Hopes this maked sense.

wilsom04

It is actuall not an expat but it is I guess you could say stock options being released to US based employees.

Normally the day that it is released and the day thepayment is received the FX rate has always been the same. This time they sent less money that what I am scheduled to post.

For example I am scheduled to post 20K but they only sent 18K. Once I process it finance will come back to me saying that they are in the negative.

Patrick Haggerty

checking the exchange rates - I don't see them at 1.85 any time in recent history - pretty much all below 1.7 for the past year.

I don't quite understand the transaction - is the UK unit granting stock bonuses, redeeming stock bonuses, or paying you for stock bonuses you are issuing for them to employees? The 1.85 may be the rate at grant.

How this is handled is a transaction analysis problem - you need to report compensation of 20,000 but only receive cash of $18,000 in a transfer price issue? That is, you give the employee's something that was worth $1.85 per pound at grant which is $20,000 = 10,811 pounds. they send you 10,811 pounds which are now worth only $17,297 - so the employees have constructive receipt of stock options worth $20,000 at the time of grant, but you have a foreign currency exchange loss of $2,703

I don't think this is something that payroll should be analyzing - this should be in the CFO's office. They should tell you what the journal entry is. If they say simply "True it up" that means they don't know either :roll: and I would put it into a "suspense" account and let the accountants figure it out :twisted:

Patrick Haggerty

BTW - in addition to my feeling this is "not your job" - my guess is that when you ask finance how to handle this - someone there will be expecting the question and will know exactly what to do. It just may not have occurred to them that you don't know (and reasonably wouldn't know) how this is supposed to be handled. Foreign currency exchange reporting is complex and the people who handle it sort of have their heads in the clouds. - Well - not so much the exchange process itself - but how to record and report it.

wilsom04

Thank you for the information!

The exchanges rates that I was using was fictious and the actual amounts are under the 1.7.

We are issuing ee stock that was released to them but I have to capture it on this side so that it can be included in the earnings and show on the W2. So I am not giving them any money just recording.

Patrick Haggerty

Right - the stock is reported on the W-2 at the value on the date granted - the UK folks are sending you an amount based on the exchange rate on that date, but since the rate has changed, the dollar value changed at your end due to the change in exchange rate - that should not be a payroll issue but a treasury (finance) issue. Talk to finance and find out how they want you to handle it rather than having to explain to them what you did after the fact.