FX-management

Multinationals' profit and loss accounts sometimes contain a chapter devoted to foreign exchange results.

Within Europe, the introduction of the euro in 2002 strongly reduced the risks related to movement of currencies and its impact on the balance sheet and the profit and loss account.

Other currencies’ exchange rates however, like of USD and GBP, still fluctuate. Valuation principles and accounting policies are becoming more and more important and correspondingly complex. After all, these standards determine whether exchange rate differences are recognized in the profit and loss account, or directly booked in the company’s equity. Under IFRS, many enterprises wishing to keep currency movements out of their income statement are forced to provide more and more required documentation to apply hedge accounting.