The compatibility of multicurrency accounting with functional currency accounting

In today's high-tech and global economy, this study introduces multicurrency accounting as an effective tool to manage resources and compares its reporting capabilities with current generally accepted accounting principles. Further, it proposes a means to integrate multicurrency accounting into internal reporting and external reporting as supplemental disclosures. Multicurrency accounting has the merit of reflecting the true exposure position of each hard currency, in addition to the dollar-based consolidated financial statement. It lends itself readily to mark-to-market accounting; its application for external reporting is foreseeable in the near future.     

An Empirical Analysis of Current US Practice in Evaluating and Controlling Overseas Operations

This project examined whether US based multinational managers used different techniques for evaluating and controlling foreign operations during the late 1980s than they used in the late 1970s and early 1980s. Consistent with prior research, a combination of surveys and interviews provided the data. Contrary to the prediction of prior research, managers continue to use financial data that has been translated into US dollars versus reports in the foreign (local) currency. Managers continue to emphasise profit as the primary basis of evaluating and controlling foreign operations. Significant changes include the increased emphasis on ‘actual compared to budget’ and decreased emphasis on return on investment.     

Usefulness of SFAS no. 52 in controlling and evaluating overseas operations: An empirical analysis

This study investigates whether managers of multinational enterprises prefer financial statements prepared under the current-rate or temporal method of translating foreign-currency-based financial statements into U.S.-dollar financial statements. The article also reports on the managers’ preferences for various indicators (for example, profit) of performance that are used in evaluating and controlling overseas operations. A questionnaire was sent to each of the “Fortune 500” firms. One hundred sixty-five (33 percent) responded. The research extended prior research by finding that in the late 1980s managers maintained their preference for U.S.-dollar-based statements just as they did in the 1970s and early 1980s. Managers still consider profit to be the strongest measure of success. However, the comparison of budgeted performance to actual performance has replaced return on investment as the second most important performance indicator.