AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
Keep the books of an Australian business in its functional currency, which for most is AUD, and record each naira transaction at the exchange rate on the day it happens. The ATO lets you use average rates in many cases, and for currencies it does not publish, any reasonable externally sourced rate. Keep the naira records too, in English, for five years.
An Australian business that buys from Nigerian suppliers, pays Nigerian staff or sells to Nigerian clients ends up with two currencies in its records. Done loosely, that produces books where the AUD figures do not match the bank, gains and losses appear from nowhere, and the accountant spends hours at year end rebuilding what happened. Done properly, it is a simple monthly routine. This guide sets out the accounting principle, what the ATO expects, and a reconciliation process that works. It is information, not accounting or tax advice.
Functional currency: the currency your books are kept in
IAS 21, the international accounting standard on foreign exchange that Australian standards mirror, defines functional currency as the currency of the primary economic environment in which the business operates. The main indicators are the currency that mainly influences your sales prices and the currency of your labour and material costs. Where financing comes from and where receipts are kept are supporting indicators.
For a business based in Australia, invoicing Australian customers and paying Australian rent and wages, the answer is AUD even if a large share of purchases is in naira. A business that mainly earns and spends in Nigeria, run from Australia by its founder, may be different, and often belongs in a separate Nigerian entity with naira books. Decide this once, with your accountant, and record the reasoning.
Which rate to use when you record a naira transaction
IAS 21 says a foreign currency transaction is recorded at the spot rate on the date of the transaction, and that an average rate for a period can be used unless rates fluctuate significantly. That second condition matters for naira, which has moved sharply at times; an average over a volatile month may not be close enough.
For tax, the ATO's translation rules say an amount for a capital asset is translated at the time of the relevant transaction, ordinary income at the earlier of when it is derived or received, and average rates are allowed in many cases. The ATO publishes monthly rates and end of financial year and calendar year rates for selected currencies, but no daily rates. Where a currency is not listed, it says you may use any reasonable externally sourced exchange rate. Whatever source you pick, use it consistently and keep a record of it.
Monetary items at month end
Naira cash, naira receivables and naira payables are monetary items. IAS 21 has them retranslated at the closing rate at each reporting date, with the difference taken to profit or loss. Non-monetary items bought in naira, such as equipment, stay at the historical rate. In practice:
- Naira bank balance
- Retranslate at the closing rate each month end; the change is an FX gain or loss.
- Unpaid naira supplier invoice
- Recorded at the invoice date rate, retranslated at month end, settled at the payment date rate. Differences go to FX gain or loss.
- Equipment bought in naira
- Kept at the rate on the purchase date; not retranslated.
Worked example
Example only, with illustrative rates. On 3 March you receive a supplier invoice for ₦1,000,000 when the rate you use is ₦1,000 per AUD. You record a payable of $1,000. On 31 March the rate is ₦1,050, so the payable is retranslated to $952.38 and you record a $47.62 FX gain. On 10 April you pay when the rate is ₦980; the payment costs $1,020.41, and against the $952.38 carried you record a $68.03 FX loss. Over the two months the net loss is $20.41, which is the difference between the $1,000 originally recorded and the $1,020.41 actually paid.
A monthly reconciliation routine
- Export statements for every account in each currency, including the naira account.
- Match each naira transaction to its invoice, payslip or receipt, and record the rate used.
- Reconcile the naira balance in naira first, then convert at the closing rate.
- Post FX gains and losses to their own account, separate from fees, so bank charges are not hidden in exchange differences.
- File the supporting documents. The ATO requires records in English or easily converted to English, generally kept for five years.
Related guides: which conversion rate the ATO accepts for naira expenses, lodging a BAS with foreign currency income and records the ATO requires for cross-border payments.
Where Pryme fits
A Pryme Business Account holds AUD and naira side by side, and Swap shows the rate first and the fee on its own line before you approve, which makes the split between exchange and fee easy to record. The Finance agent can prepare a draft reconciliation for a person to review, and verifiable receipts and statements from VerifyDoc.ai give your accountant documents anyone can check are unaltered.
Questions people ask
What functional currency should my Australian business use?
Usually AUD, if your sales prices and most costs are in Australian dollars. IAS 21 looks mainly at the currency of sales prices and of labour and material costs.
Does the ATO publish a naira exchange rate?
The ATO publishes rates for selected currencies. Where a currency is not listed, it says you may use any reasonable externally sourced rate. Check the current tables, use one source consistently and record it.
Can I use a monthly average rate for naira transactions?
Average rates are allowed in many cases for tax, and IAS 21 allows them unless rates fluctuate significantly. In volatile months, the actual rate on the day is safer.
Where do exchange gains and losses go?
Into profit or loss for the period, in their own account. Keep conversion fees in a separate expense account.
Sources
- IFRS Foundation: IAS 21 The Effects of Changes in Foreign Exchange Rates (2026 issued standards) · accessed Oct 2026
- ATO: Translation (conversion) rules · accessed Oct 2026
- ATO: Foreign exchange rates overview (updated 14 Aug 2026) · accessed Oct 2026
- ATO: Overview of record-keeping rules for business (updated 18 Jun 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.