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Currency Exchange on Foreign Awards

In most cases, awards from sponsors in the United States will be in U.S. dollars, or other foreign currencies from the relevant sponsor.

Because expenditures will generally occur in Canadian dollars and because the University’s accounts are maintained in Canadian dollars, the award is converted to Canadian dollars when the budget is established.


Rate of Conversion

The rate of conversion is the prevailing rate at the earlier of:

  • the award start date, and
  • the receipt of the first award instalment.


Exchange Rate Risk

In the case of instalment awards (the usual funding arrangement) there is a risk that the actual Canadian dollars realized on subsequent U.S. dollar instalments will be less than the amount provided to the researcher in the award budget.

This risk is assumed by the University, i.e. covered out of general revenues. Conversely, if actual Canadian dollars realized on subsequent instalments exceed that provided in the research budget, the difference is added to general revenues. Over time these gains and losses tend to offset each other.

This is done so that the researcher knows at the outset the level of funding available for the research. Had they been required to assume the exchange risk, the researcher might be faced with an unanticipated decrease in budget and, in fact, may not have sufficient remaining funds to cover this cost.



In some cases the expenditures funded by a U.S. award will take place in U.S. dollars, either because all resources are being purchased from the U.S. or because U.S. dollars are being purchased for overseas expenditures.

In these cases there is no exchange risk because the University deposits the award instalments into its U.S. dollar account and pays U.S. expenditures from the same account.

However, since the University’s accounts are maintained in Canadian dollars, all U.S. transactions are converted to Canadian dollars for purposes of recording them in the accounts.


Special Considerations

For large USD awards or other foreign currencies with an approximate value of $1.0 million (CDN) per year, close coordination between the VPRI staff (Research Funding/Partnership Officer and Director of Research Financial Reporting and Audit) and Financial Services will be required. The University will not be able to absorb the exchange rate differences without making special provisions.  Special arrangement will be required to mitigate the exchange fluctuations.

Purchases in foreign currencies. In addition to what is mentioned above, the risk for exchange fluctuation on purchases in foreign currency are absorbed by the project. Financial Services must be informed if the purchase is for a significant amount (C$ 200,000.00 and above) and the payment date is scheduled for a future known date,  Financial Services will assess whether a special arrangement can be made to mitigate the risk for exchange fluctuation.

External Hedging Arrangements. Since hedging arrangements are extremely cumbersome to administer, it is only exercised when the amounts are significant (when one transaction is $200,000 (CDN) or above) and time when the transaction will occur is known with certainty (expected to occur within one month

For Multi year awards and the award is approved by the sponsor on an annual basis, the exchange rate that will be used is the rate at the time the award is approved by the sponsor or when the payment of the award has been received, whichever comes first.

The PI will assume the risk on the exchange loss as a result of unfulfilled foreign contract.