June 15, 1992
TO: ACCOUNTING/TREASURERS COMMITTEE NO. 28-92
INDEPENDENT ACCOUNTANTS ADVISORY GROUP
RE: AICPA STATEMENT OF POSITION ON FOREIGN CURRENCY ACCOUNTING
AND REPORTING
__________________________________________________________
Enclosed for your review is a copy of the AICPA’S Proposed
Statement of Position (SOP), Foreign Currency Accounting And
Financial Statement Presentation For Investment Companies . The
SOP applies to international, global, and single-foreign-country
funds registered in the U.S. and to offshore funds that follow
U.S. generally accepted accounting practices; it seeks to
standardize the measurement of foreign currency gains or losses
and their financial statement presentation consistent with the
approach of FASB Statement No. 52.
The SOP would require all foreign currency gains or losses
(including foreign currency gain or loss on interest or
dividends) to be separately identified and reported in the
statement of operations as components of realized and unrealized
gain or loss.
Paragraph 6 of the SOP identifies the sources of realized
or unrealized foreign currency gain or loss as follows:
- interest, dividends, and withholding taxes accured versus
the amount received or receivable based upon current
exchange rates
- expenses accrued versus the amount paid or payable in
foreign currencies, based on current exchange rates
- the cost of securities held versus their carrying value
based on current exchange rates
- payables or receivables for securities bought or sold at
the transaction date versus actual amounts at settlement
date or payable or receivable based on current exchange
rates
- marking to market of forward exchange contracts or forward
exchange futures contracts
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Comments are due to the AICPA by August 4, 1992. Please
provide the Institute with any comments you wish to have included
in the Institute’s response by July 14, 1992.
Donald J. Boteler
Assistant Vice President -
Operations
Enclosure