FYI

 -----Original Message-----
From: 	Scott, Laura  
Sent:	Thursday, June 14, 2001 1:43 PM
To:	Hedstrom, Peggy
Subject:	RE: Functional Currencies

The issue isn't can we.  It's how much extra work would be involved in doing this.  Also, if you had a financial hedge between gas and power with different functional currencies, our overall P&L could be significantly impacted by this. 

I talked this over with the internal audit people when they were up here.  They agreed this could be significantly extra work with the integration of our operations.

 -----Original Message-----
From: 	Hedstrom, Peggy  
Sent:	Thursday, June 14, 2001 10:11 AM
To:	Mckay, Jonathan; Reeves, Kathy; Gillis, Brian; Scott, Laura
Subject:	FW: Functional Currencies

Apparently, the London office was able to justify multiple functional currencies for a single legal entity.  Beth Apollo felt that we could make a strong case to have separate accounting entities for power and gas, each with their own functional currencies.  Please read through the attached documents and I will set up a meeting to discuss this further next week.  We can get Shelly Stubbs or Beth Apollo involved as well if needed.
Thanks
Peggy 

 -----Original Message-----
From: 	Stubbs, Shelly  
Sent:	Thursday, June 07, 2001 5:35 PM
To:	Hedstrom, Peggy
Subject:	Functional Currencies

Peggy,

Apologies for not getting back to you sooner.  I had to track down a FASB book as all of my electronic notes are in the great Enron IT black hole!

There are several passages in FASB 52 which justify multi functional currencies for a single legal entity.  I have quoted a few excerpts for you below.  The AA person in London who "signed off" on this for us was Sarah Williams, but I have been told she is no longer with AA.  However, there are several references to companies that do the same thing and arguments for the same on AA's Research Manager web site.  I have copied some text from AA in the attached word document.

I don't think you will have any problems, but if you do and I can help, let me know.

Regards,
Shelly

FASB 52

Paragraph 5:  The assets, liabilities, and operations of a foreign entity shall be measured using the functional currency of that entity.  An entity's functional currency is the currency of the primary economic environment in which the entity operates...

Para 7:  An entity might have more than one distinct and separable operation, such as a division or branch, in which case each operation may be considered a separate entity.  If those operations are conducted in different economic environments, they might have different functional currencies.

39:  An entity's functional currency is the currency of the primary economic environment in which the entity operates...

43:  In some instances, a foreign entity might have more than one distinct and separable operation.  (furthers with an example).  ..each operation may be considered to be an entity as that term is used in this statement; and, based on the facts and circumstances, each operation might have a different functional currency.


 << File: AA research manager excerpt.doc >>