Foreign Currency Transactions and Translation of Foreign Currency Financial Statements: A Survey of Accounting Practices by Saudi Corporations

Abstract

The objective of the research is to study and evaluate the methods used in accounting measurement and treatments of foreign currency transactions and translation of financial statements. The research is also aimed to survey the actual accounting practices in the area of accounting for the effects of changes in foreign exchange rates in a sample of Saudi industrial companies. Research results revealed that traditional methods and SAFS # 52 used to translate foreign financial statements do not take its consideration the changes of the general price-level neither the home country nor in the host one. In addition, it indicated that actual accounting practices in some Saudi companies confirm mostly with the recommendations of International Accounting Standard (IAS) #21 issued in 1983. Without taking into consideration the effects of foreign and local inflation when translating foreign subsidiary financial statements.