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Capturing Data on Recorded Assets and Liabilities
Companies need to collect and review data on foreign currency exposures (foreign currency assets and
liabilities) generated from their accounting systems (accounts receivable, accounts payable, and so on),
a task that becomes more challenging if there are multiple systems deployed. Ideally, this data capture
should be automated through financial system inquiry programs that produce appropriate summary
reports for determining hedging amounts. A review of the foreign exposure data is a prudent business
practice because erroneous journal entries may have been posted to the general ledgers.
Once this data is collected and reviewed, the organization can implement its hedging program, reducing
the percentage hedged based on an assessment of the risk that the data capture was susceptible to error.
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