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Chapter 2 — Financial Statement Accounting and Disclosure Topics

2.10 Foreign Currency

2.10 Foreign Currency

The SEC staff’s comments on quantitative disclosures related to foreign currency adjustments reflect published staff views5 on the topic, under which registrants should:
  • “[R]eview management’s discussion and analysis and the notes to financial statements to ensure that disclosures are sufficient to inform investors of the nature and extent of the currency risks to which the registrant is exposed and to explain the effects of changes in exchange rates on its financial statements.”
  • Describe in their MD&A “any material effects of changes in currency exchange rates on reported revenues, costs, and business practices and plans.”
  • Identify “the currencies of the environments in which material business operations are conducted [when] exposures are material.”
  • “[Q]uantify the extent to which material trends in amounts are attributable to changes in the value of the reporting currency relative to the functional currency of the underlying operations [and analyze] any materially different trends in operations or liquidity that would be apparent if reported in the functional currency.”

Footnotes

5
Division of Corporation Finance: Frequently Requested Accounting and Financial Reporting Interpretations and Guidance, Section II.J.
6
Division of Corporation Finance: Frequently Requested Accounting and Financial Reporting Interpretations and Guidance, Section I.D.