Abstract
M.Com. (Economics)
The aim of this study is to determine whether the different methods
of translation are conceptually accounted for. The disclosure
practices currently being used in South Africa were evaluated to
determine to what extent financial statements comply with the
relevant standard of accounting practice.
The objective of translation used as basis for the problem of foreign
currency translation is compatible with the concept of economic
decision-making usefulness. The acceptance of an objective of
translation is a prerequisite for a specific methcx1 of translation.
The temporal method and the closing rate method are both, depending
on the specific circumstances, conceptually accounted for.
There are material differences between the approach suggested by Jean
Miller and current international practice. All translation
differences are, according to this approach, accounted for in the
inccme statement. Miller's approach has certain advantages and
should be supplied to the business sector for commentary.
There are no material differences between the standards of the
Accounting Practice Board, the Financial Accounting standards Board,
the International Accounting standards Camzi.ttee and the Accounting
standards Camzi.ttee when it comes to the translation of the financial
statements of foreign operations. Against this backgrexmd, the
financial statements of selected ccmpani.es were evaluated for
ccmpliance wi th statement RE 112 and exposure draft 83. The
evaluation indicated that the closing rate method 1 is being used by
the majority of companies. Translation differences are directly
accounted for against non-distributable reserves. The assumption is
that the business sector would not support: Miller's approach, due to
the fact that all translation differences are exempted for in the
income statement.