ABSTRACT
Currency hedging has implications for a company's profit and loss account and balance sheet. There are several general rules for accounting that ought to be followed.
A coherent and consistent accounting policy should be defined at the outset. This policy should ensure that the accounting for a transaction reflects economic reality and applies fundamental accounting principles and concepts.
The policy should be explained to the financial managers of each business unit and approved by the company's auditors.
The policy should be adhered to unless circumstances change requiring a revision. Accounting policy should not be altered regularly in order to improve the reported profits for the year. Any revision of policy must be cleared with the company's auditors.
