The Problems in preparing financial statements due to foreign exchange rate changes and the proposals of solution

Pages In this study, firstly the effects of foreign exchange rates changes and methods which can be used for managing these effects have been examined. And then, the steps of preparing consolidated financial statements have been explained in a detailed way. Also, by the help of examples how consolidated financial statements should be prepared under inflationary condition have been illustrated. The main theme of this study is translation methods that are used for changing national currency of financial statements of subsidary firms which is to be consolidated. Moreover, these translation methods and its effects on consolidated financial statements have been determined. A questionnaire study has been made in order to strengthen the theoritical part of this study and by this questionnaire study the problems of holding firms in Turkey which stem from preparing consolidated financial statements and changing financial statements of subsidiary firms to Turkish Liras in using translation methods and whether the firms have sufficient information about these translation methods or not have searched. Also, by this questionnaire study precautions that are taken by holding firms to avoid the negative effects of foreign exchange rate changes and which methods that are used have been determined. As a result, in Turkey, the most suitable method for translating financial statements in Turkish Liras have been determined and proposals oriented to the solution of these problems have been devoloped.Key words: Foreign exchange rates, consolidated financial statements, inflation accounting, traslation methods.