Problem

Foreign currency manipulations in accounting records of transnational corporations

Nature:

For the purpose of preparing consolidated statements, the financial statements of foreign subsidiaries expressed in terms of the various host countries' currencies need to be translated into the currency of the parent company. At a time when exchange rates are subject to substantial fluctuations, the method of translation can significantly affect the results. The simplest method, which is still widely used by companies in western Europe, is the application of the closing rate to all items in the subsidiaries' financial statements. More sophisticated methods involve the use of different rates for the translation of different items.
Broader Problems:
Creative accounting
Imperfect accounting
Unethical practices of accountants
Values:
Foreign
Manipulation
Subject(s):
Commerce → Accounting
Commerce → Currency
Commerce → Multinationals
Information → Documentation
Society → Foreign
Related UN Sustainable Development Goals:
GOAL 8: Decent Work and Economic GrowthGOAL 17: Partnerships to achieve the Goal
Problem Type:
E: Emanations of other problems
Date of last update
12.08.2019 – 17:15 CEST