SPECIFIC PROBLEMS AND APPROACHES IN CONVERTING ACCOUNTING INFORMATION INTO DIFFERENT CURRENCIES FOR MANAGEMENT PURPOSES IN MODERN GLOBAL COMPANIES

Abstract

Among the biggest challenges facing today's companies developing global activities are the exchange rates between different currencies and their continuous changes. A typical characteristic of this type of companies is that their constituent divisions – subsidiaries, are located in many countries around the world and the accounting of their activities, as well as the compilation of their financial reports, is associated with using of various currencies. Fluctuations in exchange rates create a number of problems for global companies both in connection with financial reports intended for different external users and with the conduct of internal management processes within their international borders. The main objective of the article is to substantiate the significant role of accounting information in reflecting influence of exchange rates in processes of making management decisions in modern companies with global operations and the need to apply specific approaches to converting this information into different currencies for the purposes of managing the company's overseas divisions operating in different countries around the world. To achieve this main objective, the following tasks are set for solution: - to argue the significance of exchange rates in the implementation of management processes within global companies, in particular in drawing up plans, analyzing, controlling and coordinating the various activities carried out through constituent structural divisions in different geographical regions worldwide; - to systematize the key tasks in the processes of managing global operations, which need to be solved using accounting information in the local currencies of individual overseas divisions and also in the common currency for the company, and require intra-corporate currency conversions; - to explore the specific issues and challenges associated with converting accounting information into different currencies for the purposes of managing a company's global operations; - to examine in a comparative manner alternative approaches for currency conversions of accounting information for management purposes in global companies and to highlight their advantages and disadvantages. In methodical terms, the use of a systemic approach is of essential importance in examining the problematic issues in this article. From the position of this approach, the problems associated with reflecting the influence of exchange rates are considered in the context of the unified system for making management decisions typical for global companies and the coherence of goals in a global plan for achieving global optimization. The research methodology also includes the inductive and deductive methods, analysis, synthesis, observations, comparisons, etc. The incorrect choice of approaches for currency conversion can lead to distortion of information, to erroneous judgments and incorrect management decisions. Only by accurately reflecting the impact of exchange rates and carefully analyzing the effects resulting from their changes can an objective assessment of results be ensured and reasoned decision-making in management processes be supported, both at the division level and at the corporate level as a whole.