Find links to the accounting standard, technical summaries, useful guides and other resources on FRS 2 collated by ICAEW Library & Information Service.
The first common mistake is difficult to detect without knowing how the accounting system consolidates subsidiaries.
This mistake occurs when a company misclassifies a foreign-currency gain or loss in OCI instead of net income.
Although the rules on accounting for foreign-currency translations have not changed in many years, mistakes in this area persist. With the increase in foreign transactions comes a parallel increase in foreign-currency reporting, and since many companies do business in multiple countries, the complexity of such reporting is on the rise.
Such mistakes can result in misstatements in financial reporting, hurting the bottom line, creating false understandings of business results, and exposing companies to possible regulatory scrutiny. exports are growing at a healthy pace, as a slumping dollar makes goods from the U. The risk of accounting errors in foreign-currency transactions has been compounded by significant volatility in the value of the U. dollar compared with some other currencies, especially in the past 18 months. companies expand their presence in global markets, it is more important than ever to understand and address the most common pitfalls associated with working with foreign currencies.
Accounting rule makers and regulators are more and more focused on how to account for the investments in subsidiaries.