Hodak - Measuring EP/EVA


	Foreign operations
	Generally, management accountability should be consistent with its sphere of responsibility. Therefore, when a business is selling or producing abroad, we must first determine where the locus of accountability should be, i.e., with the business unit management, or with management at a more aggregate level. Once we have decided that business unit management is accountable for the economic impact of foreign operations, we must then determine what specific accounting adjustments should be made to reflect that accountability. Generally, accountability issues include currency fluctuations, their impact on the balance sheet, the degree to which costs may be incurred to hedge those fluctuations, and differential tax consequences of operating in one country versus another.