The functional currency of your subsidiaries impacts not only how your financials are prepared, it sets the strategic stage for how your company views currency exposures, determines if you qualify (or not) for special hedge accounting, and even how competitive you can be against your rivals.

This course explains the long and sometimes unfavorable and lasting impacts of a company’s functional currency decision. We also discuss how to determine the functional currency, why it matters so much, and some of the things to watch out for when setting up a new legal entity. 

Learning Objectives
  • Discover the six economic indicators for determining an entity's functional currency
  • Recognize the implications of choosing local vs. a parent’s currency as the functional currency.
  • Identify the special hedge accounting limitations related to the functional currency decision.
  • Discover a greater appreciation for the strategic decision surrounding the functional currency of an entity
Last updated/reviewed: August 20, 2023
11 Reviews (39 ratings)


Member's Profile
Interesting presentation which provided insight on how to determine the right functional currency of a non-US subsidiary.Course could be improved by including a brief lesson on the accounting issues mentioned. Lastly, I liked the presentation style which included a second presenter.

Anonymous Author
Very interesting topic. The course provokes thinking in determining the right functional currency of a non-US subsidiary from both a financial and economic standpoint. There are also some good considerations of what to do when the wrong functional currency is selected originally.

Anonymous Author
This is a complex subject and would benefit from a review of FASB 52 beforehand. It feels like it focuses too much on the treasury aspects before a foundation of the accounting side is established.

Anonymous Author
Very good course. The interaction between Jim and Ruth, and the unique expertise that each one of them brings make for an effective presentation. They bring clarity to a complex subject matter.

Member's Profile
I have to say I needed to know more going in our have a more detailed intro to graps what all was being talked about. That is why they are the experts and I am not !

Member's Profile
The instructors were good and presented in a way to keep your attention, however I think the Slides could be a bit better presented with more information

Member's Profile
I really liked the discussions of the various scenarios involving parents & subs, and how to set the functional currency for long term benefits.

Member's Profile
Good information, still a little difficult to understand all of the moving parts around FX hedging but I learned more.

Anonymous Author
USD Functional with Local Currency Set-Up Affects affectd on real accounting transaction for local invested company

Anonymous Author
The course is presented well. The instructors are clear and make the concepts understandable.

Anonymous Author
Overall good course.

Course Complexity: Intermediate

Prerequisite: Basic proficiency in accounting and corporate finance and experience with transaction and translation accounting and a basic understanding of the functional currency concept will be helpful.

Advanced Preparation: None


Education Provider Information
Company: Illumeo, Inc., 75 East Santa Clara St., Suite 1215, San Jose, CA 95113
Contact: For more information regarding this course, including complaint and cancellation policies, please contact our offices at (408) 400- 3993 or send an e-mail to .
Instructor for this course
Course Syllabus
Functional Currency
  Why Does Functional Currency Matter?6:51
  Why FX Accounting Risk Can Be "Good"6:19
  Local Currency Accounting7:33
  Why Aren't We Hedging EUR?6:23
  When I.T. or Others Drive F.C. Decision10:35
  We "Might" Have it Wrong. What to do?11:19
  Divestitures: Replicating The Old or a Fresh Look?5:30
  Slides: Functional CurrencyPDF
  Functional Currency Glossary/IndexPDF