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dc.contributor.authorLaswad Fawzien
dc.contributor.authorRoush Melvinen
dc.date.accessioned2008-10-24T03:15:14Z
dc.date.issued1999-02en
dc.identifier.issn1174-5045en
dc.identifier.urihttps://hdl.handle.net/10182/605
dc.description.abstractThe New Zealand standard on foreign currency translation (FRS-21), similar to standards in the US, Australia, and Canada and the International Accounting Standard (IAS-21), requires the classification of foreign operations for translation purposes into two mutually exclusive types: integrated or independent. In judging whether a foreign operation is either integrated or independent, the accounting standard requires the evaluation of five qualitative factors. The standard neither describes the judgement process nor identifies the relative importance of the determining factors. It has been asserted that the lack of clarity in the standard on foreign currency translation may yield dissimilar results for firms whose circumstances are similar and consequently may reduce the comparability of financial statements across firms. Using a repeated measures design, this paper examines the judgement of preparers of financial statements (New Zealand financial controllers) in determining the designation of foreign operations for translation purposes. The results indicate that the relative importance of the determining factors is marginally unequal. No support is found for the assertion that the use of qualitative factors in accounting standards results in dissimilar judgements (lack of consensus) across respondents. Further, the results show that the subjects demonstrated consistency and self-insight in their judgements. Further, the results indicate that the judgements of respondents are not biased toward either classification of foreign operation. This may suggest that the observed bias may be motivated by economic factors rather than the outcome of using the qualitative cues in the accounting standard. When the respondents were debriefed, several of them identified ‘managerial independence’ as another determining factor that has not been included in the NZ standard.en
dc.language.isoenen
dc.publisherLincoln University. Commerce Division.en
dc.relationThe original publication is available from - Lincoln University. Commerce Division.en
dc.subjectforeign exchangeen
dc.subjectfinancial analysisen
dc.subjectfinancial reportingen
dc.subjectaccounting educationen
dc.titleClassification of foreign operations for financial reportingen
dc.typeDiscussion Paper
dc.subject.marsdenFields of Research::340000 Economics::340200 Applied Economics::340203 Finance economicsen
dc.subject.marsdenFields of Research::340000 Economics::340200 Applied Economics::340206 International economics and international financeen
dc.subject.marsdenFields of Research::350000 Commerce, Management, Tourism and Services::350100 Accounting, Auditing and Accountabilityen
lu.contributor.unitLincoln Universityen
pubs.organisational-group/LU
pubs.publication-statusPublisheden


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