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
At each month end, translate naira monetary items, such as bank balances, receivables, payables and loans, into your functional currency at the closing rate, and post the difference from the previous carrying amount to exchange gains or losses in profit or loss. Non-monetary items such as equipment and prepaid stock stay at the rate on the day you bought them. The same logic applies in reverse to a Nigerian company holding dollars.
What gets revalued and what does not
IAS 21 paragraph 23 sets the rule at the end of each reporting period: foreign-currency monetary items are translated using the closing rate; non-monetary items measured at historical cost stay at the rate on the transaction date; non-monetary items at fair value use the rate on the date the fair value was measured. Paragraph 8 defines monetary items as units of currency held and assets and liabilities to be received or paid in a fixed or determinable number of units of currency.
| Item in naira | Monetary? | Month-end treatment |
|---|---|---|
| Naira bank balance | Yes | Closing rate |
| Trade receivable from a Nigerian customer | Yes | Closing rate |
| Supplier invoice not yet paid | Yes | Closing rate |
| Loan to the Nigerian subsidiary repayable in naira | Yes | Closing rate |
| Generator bought for the Lagos office | No | Rate on purchase date |
| Rent paid in advance | No | Rate on payment date |
Paragraph 28 says exchange differences on settling or retranslating monetary items are recognised in profit or loss in the period they arise, with limited exceptions such as certain net investments in foreign operations. Paragraph 29 adds that if an item is settled in a later period, each period recognises the difference caused by that period's rate changes.
Example 1: a UK company with a naira account
A UK company (functional currency pounds) holds ₦10,000,000 in a Nigerian account. On 31 August it was carried at an illustrative ₦2,000 to £1, so £5,000. On 30 September the illustrative closing rate is ₦2,100 to £1.
- New carrying amount: ₦10,000,000 / 2,100 = £4,761.90.
- Difference: £5,000.00 - £4,761.90 = £238.10 loss.
- Journal: debit exchange losses £238.10; credit naira bank (in pounds) £238.10.
- The naira ledger still shows ₦10,000,000. Only the pound value has changed.
A receivable that is settled the next month
On 10 September the company invoices a Lagos customer ₦5,000,000 at an illustrative ₦2,050 to £1: £2,439.02. At 30 September, at ₦2,100, the receivable is £2,380.95, so a loss of £58.07 is posted. On 15 October the customer pays ₦5,000,000 when the illustrative rate is ₦2,080: £2,403.85. The October books record a gain of £2,403.85 - £2,380.95 = £22.90. Over the two months the net loss is £58.07 - £22.90 = £35.17, which equals £2,439.02 - £2,403.85. The arithmetic ties out.
Example 2: a Nigerian company with dollars
A Lagos company (functional currency naira) holds $10,000 in a domiciliary account. It was carried at an illustrative ₦1,500 to $1, so ₦15,000,000. At month end the illustrative closing rate is ₦1,450. The new carrying amount is ₦14,500,000 and the company posts a loss of ₦500,000: debit exchange losses, credit dollar bank. If the naira weakened instead, to ₦1,550, the balance would be ₦15,500,000 and the company would post a gain of ₦500,000.
Realised and unrealised
Many businesses split the profit and loss line into realised differences (on payments actually made or received) and unrealised ones (on month-end revaluation of balances still held). Some accounting systems reverse the unrealised entry on the first day of the next month and recalculate at the next month end; others carry the revalued amount forward. Either works if applied consistently and the accountant knows which you use. Tax treatment of exchange differences is a separate question for your Nigerian or local tax adviser.
Which framework applies to you
The paragraph numbers here are from full IAS 21. Many smaller companies report under IFRS for SMEs instead, which has its own section on foreign currency built on the same ideas. The IFRS Foundation says IFRS for SMEs was updated in February 2025, with the new edition effective for periods beginning on or after 1 January 2027 and early adoption allowed. Ask your accountant which framework your company uses in Nigeria and abroad, because a UK parent and a Nigerian subsidiary may not use the same one.
Whatever the framework, the Nigeria Tax Administration Act 2025 section 31 requires books and records detailed enough to work out tax, in English, for at least six years after the year of assessment. Keep each month's revaluation schedule, the closing rate and its source in that file, so the numbers can be traced if the company is audited or questioned years later.
Month-end routine
- Reconcile each naira balance in naira against the bank statement or customer ledger.
- Record the closing rate and its source in the month-end file.
- Run the revaluation in your accounting software or calculate it in a schedule.
- Review large movements, so a rate effect is not mistaken for a trading loss.
- Keep the schedule with the month's records.
The rate choice matters as much as the method; see which naira rate to use in your books and keeping multicurrency books. For managing the exposure itself, see hedging naira exposure.
Where Pryme fits
A Pryme Business account keeps naira, dollar, pound and euro balances side by side, and the Finance agent can prepare the month-end revaluation schedule from them for a person to review and post.
Questions people ask
Do I revalue a naira bank balance every month?
If you report monthly, yes: monetary items in foreign currency are translated at the closing rate at each reporting date under IAS 21.
Where does the revaluation difference go?
To exchange gains or losses in profit or loss, under IAS 21 paragraph 28, apart from limited exceptions.
Do I revalue equipment bought in naira?
No. Non-monetary items at historical cost stay at the rate on the purchase date.
Is an unrealised exchange loss deductible for tax?
That depends on the tax rules where the company is taxed. Ask your tax adviser.
Sources
- IFRS Foundation: IAS 21 The Effects of Changes in Foreign Exchange Rates (2026) · accessed Oct 2026
- Nigeria Tax Administration Act 2025 (gazette copy) · accessed Oct 2026
- IFRS Foundation: IFRS for SMEs Accounting Standard · 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.