Communicating ﬁ nancial reporting across continents

Financial reporting is an area with distinctive terminology characteristics. High qua ity translations require both language and specialist knowledge. The varieties of English complicate the choice of language: British, American or international English? The article examines the challenges translators face when choosing between these ‘Englishes’. To determine how/whether a theoretical approach and a proper translation pro cess can result in higher quality, the article will look at translation tools and strategies, problem-solving activities and consistency in choice of terminology.


Introduction
Most Danish companies are required to produce translations of their fi nancial data, primarily in English. Traditionally they have focused on UK English, but today an increasing number of Danish companies address the US and therefore need to communicate in US English. Several companies have adopted the International Accounting Stan dards (IAS) 1 and prefer an international variety of English and -be cause they address target groups outside the US and the UK -need to use English as a lingua franca, not particularly wishing to be US or UK biased. The re cent enactment of a new Danish Financial Statements Act, which is widely based on IAS, has further shifted the focus to wards international, IAS-based English.
Accounting is a challenging subject requiring much specialist background knowledge, and fi nancial reporting is an area with distinct ter mi nology characteristics. Therefore, high-quality translations in this subject area require both language and specialist knowledge. That it is impossible for a translator to translate a text he or she does not under stand (Kurz 1988:424) highly applies to the complex subject of accounting. As Parker puts it: "Understanding accounting terminology in languages other than English thus needs to go hand in hand with acquiring a knowledge of relevant accounting theory and practice" (Parker 2001:102). My fi ndings show that this statement is indeed also true of English, given the numerous varieties of this language which further complicate the translator's task when translating from Danish into English: Which English? British, American or international English? It is the translator's responsibility to ensure that the target text (TT) works; the consequences of mistranslations are many and serious. Investors may make wrong decisions because of low-quality translations. Within this subject area, the choice of English variety is important as accounting terminology highly differs between UK and US English. International 'IAS' English is a mixture of the two, though with a strong US bias (see below). My observations are based on a text corpus consisting of annual reports for 2001 in Danish and English presented by Danish KFX companies listed on the Copenhagen Stock Exchange. The corpus contains enterprises in reporting class D 2 to which the most comprehensive reporting requirements apply under the new Danish Financial Statements Act 2001.
My investigations show that translations of fi nancial reporting are often poor. In a previous paper (Mourier 1996) it was shown that lack of background knowledge was the most serious reason for poor trans lation quality, and that such knowledge is a prerequisite for high quality in accounting text translation. According to Gile (1995:86-87), translators can 'gain non-trivial understanding of the text or speech in spite of their lack of specialised knowledge'. This applies especially to technical texts, as Gile's example from a medical textbook also illustrates. In fi nancial reporting texts, however, much is implied and the mere knowledge of terms is not suffi cient to achieve high quality. With regard to accounting texts, I agree with Gile's translation model (1995:102) from which it appears that extra-linguistic knowledge plays a major role in both the comprehension and the reformulation phases in the translation process. The translator will of course never audit or prepare fi nancial statements. However, my fi ndings 3 show that his or her extra-linguistic background knowledge must be at a fairly high level and certainly suffi ciently adequate for understanding the accounting subject matter in order to enable him or her to provide translations of a satisfactory standard. This view is also held by Parker (2001:102): "… translation is not simply a mechanical exercise of substituting a foreign language term for an English one. The translator needs a knowledge not just of terminology, but also of the fi nancial and fi scal systems in which companies operate".
The role of language is important to Danish companies when they issue fi nancial reports in English. Adequate communication to stakeholders requires that the translated text conveys the same message as the source text (ST). Language is part of the company's image and a means of communicating important messages to target readers. Therefore, the choice of a particular variety of English will often be a management decision. This paper will examine the importance of the appropriate type of English in fi nancial reporting communication and some of the challenges faced by the translator. It will conclude with a discussion of the methodology and tools available to the translator.

Challenges when translating into English
The obstacles to understanding company fi nancial statements can be divided into (a) differences in accounting principles, and (b) linguistic (terminology) differences. According to Nobes & Parker (2000:427), even professional analysts fi nd the language barrier a signifi cant problem in international fi nancial analyses. One of the objectives of IAS is to make it possible for company stakeholders to compare fi nancial state ments across borders and industries. The wording of the IASC 4 objective is: "(a) to develop, in the public interest, a single set of high quality, understandable and enforceable global accounting standards that re quire high quality, transparent and comparable information in fi nancial statements and other fi nancial reporting to help participants in the world's capital markets and other users make economic decisions". 5 Uniform rules are obviously helpful. As for language, however, uniformity is not treated in IAS. The International Accounting Standards Board (IASB) has not adopted any language policy for uniform English terminology, and therefore the standards refl ect the English used by IAS authors: American, British, Canadian, etc., though, as stated above, with a strong US English bias. Therefore, international accounting English constitutes a variety of 'Englishes', and companies are free to choose whether to translate into UK, US or other types of English when applying the IASs. IAS English is discussed in more detail below.
Company policy differs as to choice of English: some companies are subsidiaries of American groups and are required to use US English as their corporate and reporting language; other companies may wish to signal their European origin by opting for British English. Others again wish to be global and ask the translator to translate into international English. The choice of variety is an important, strategic decision that should never be made at random, but indeed by management.
As a small country, it is essential that Denmark translates text material into English in order to reach an international forum. This also applies to fi nancial reporting texts. Therefore, Danish translators are faced with the challenge of translating from their mother tongue into a foreign language, which is the opposite of what translators in other countries normally do. Danish translators must therefore have a very high level of language profi ciency in both Danish and the different varieties of English -together with specialist background knowledge of the subject matter of both the ST and the TT universes (i.e. language areas). Together with extra-linguistic knowledge, a theoretical approach and a translation process with adequate strategies, problem-solving methods and proper tools (parallel texts, dictionaries etc.) help translators achieve high quality (Mourier 2000:128).

Isn't English English?
The framework and underlying principles in British and American account ing are generally the same, but accounting terminology is very different in the UK and the US. Some terms are different, but un problematic in that they can easily be understood by the native US or UK user, and even by the non-native speaker of English (see Figure 1). However, even if they do not result in comprehension problems, accounting terms in English should not be chosen at random. It may be detrimental to the image of the company (the sender) that UK and US terminology appear as a mixed bag. It applies both for TTs that are operational and informative that terminology must be consistent and applied with care. The linguistic form is an important parameter in successful corporate communications and expected to add quality to the corporate image. Sloppy language sig nals sloppiness in general (in delivery, product quality, etc.). The fi nancial text genre is characterised by sensitive language: wording and terminology are carefully chosen in the source language and such choices must be mirrored in the TT.

UK US fi nancial year
fi scal year turnover sales stocks inventory equity capital common stock equity equity capital Figure 2: Examples of problematic accounting terms UK/US English Figure 2 shows examples of English terms with different meaning depend ing on their UK or US origin. The reason that I refer to such terms as problematic is that the use of a UK term in a US TT context may cause the TT reader to misunderstand the content. The UK term 'fi nancial year' refers to the accounting year, as does the US 'fi scal year'. However, in UK English, the term 'fi scal year' refers to the tax year and not the accounting year. In the UK context, 'turnover' refers to goods and services sold, whereas in the US context, 'turnover' refers to the turnover of employees or creditors. US terminology applies 'sales' for goods and services sold. The UK term 'stocks' is equivalent to US 'inventory', and the US term 'stocks' refers to securities. The term 'equity capital' is particularly tricky: equivalent to 'equity share capital' when used in UK English and to 'equity' when applied in US English. It is imperative that the translator is aware of which terms are problematic to achieve high quality in the TT -a mixture of UK and US terminology may lead to serious misinterpretation of the text's message.

English benchmarking
As mentioned above, Danish companies are required to publish their fi nancial reports in English to address their international stakeholders. What should be used as benchmark once the choice of English has been made? What is international English?

UK and US English
British accounting terminology appears in the Companies Act of 1985, which determines the overall accounting rules, and in the Statements of Standard Accounting Practice and (from 1991) the Financial Reporting Standards that defi ne accounting procedures and concepts. American accounting rules are laid down by the Financial Accounting Standards Board (FASB) and appear in the FASB Conceptual Framework and Statement of Financial Accounting Standards that include terminology defi nitions (FASB 2000). Therefore, for UK and US terminology, adequate source material is available.

International English
The obvious sources for international English accounting terminology are the IASs and IFRSs. 6 As already mentioned, the IASB does not have any distinct language policy as to which type of English terminology is to be employed and simply states that 'the approved text of any exposure draft or standard is that published by IASC in the English language' (IAS Preface, IASB CD-ROM). The 'Help' section to the CD-ROM edition appreciates differences between UK and US English: "If you are familiar with US terminology or spelling please key in both the UK and the US word" (IASB CD-ROM). Terminology is clearly important to the IASB: key account ing concepts (consisting of both UK and US terms) are defi ned in a Glossary of Terms included in an appendix to the IASs, which is an extremely helpful tool to the translator. Here, the US or UK English terms are defi ned as applied for IAS purposes. As IASs/ IFRSs draw heavily on the US FASB statements, there is a strong bias towards US English accounting terminology. However, spell ing leans towards UK English, as appears from terms such as 'amortisation', 'realis able' and 'labour', where US spelling has 'amortization', 'realizable' and 'labor'. The general importance of language appears from the fact that the translation into Danish of the standards 7 has been approved by the IASB as the offi cial Danish translation. Therefore, the mix of US and UK English in IAS terminology seems strange (see Figures 3 and 4 below).
To the user of IASs/IFRSs written in English, it seems that authors of the individual standards have applied whichever English termi nology they are used to, and this terminology then becomes the IAS/IFRS English terminology. An example: profi t is referred to also as income (although named the income statement, the format shown in the appendix to IAS 1 employs the term profi t rather than income to individual items). Figure 4   It is now interesting to compare the terms in Figure 3 with the IAS terminology and presentation in Figure 4 (US-biased terms are marked with '$'):

Annual reports translated into English
My observations show that Danish companies applying IAS make a distinct choice of either UK or US English terminology. Where bias towards the Danish ST is necessary for correct understanding, IAS terminology may be an appropriate choice. A case in point is the term 'associate' (see Example 3 below with comments). To the translator the challenge is that he or she must be able to operate in all three English universes and be familiar with the US/UK/IAS terminology. Apart from the items in the fi nancial statements, other terminology in the annual report differs widely in the various 'Englishes'. A particularly challenging term is 'ledelsesberetning', in UK English referred to as 'directors' report' and in the US as 'Management's Discussion and Analysis (of Financial Condition and Results of Operations)'. Here, background knowledge is also essential: the Danish 'beretning' (report) is -as laid down by law -the responsibility of both the board of directors (bestyrelse) and the executive board/management board (direktion). As appears, the UK term is not equivalent to the Danish term and will, if applied, distort the meaning. The US term may be used if the Danish term 'direktion' is translated into 'executive board' instead of 'management'. This leaves the term 'management' open to be applied for 'ledelse' and interpreted in the general sense of the term that encompasses both board of directors (supervisory board) and executive board. The trend in international English translations is indeed towards 'supervisory board + executive board' for 'bestyrelse + direktion', leav ing 'management' to be used for 'ledelse' in general. This also solves the translation problem so that 'ledelsesberetning' translates into 'management review' 9 and 'ledelsespåtegning' into 'statement by the management on the annual report'. I have chosen the following three examples from Danish annual reports translated into and from English to document that the translator must possess specialist background knowledge: Intangible fi xed assets are valued at acquisition price less *depreciation or at *recovery value if lower.
In connection with intangible fi xed assets, the term for 'afskrivning' is 'amortisation', 10 as 'depreciation' is used in connection with tan gible, fi xed assets. '*Recovery value' is a word-by-word trans la tion as the term equivalent to 'genindvindingsvaerdi' is 'recoverable amount '. 11 With adequate background knowledge supplemented with research on defi nitions of concepts and use of parallel texts, the errors might have been avoided. The changed Danish terminology in the new Danish Financial Statements Act, which is applied in the 2001 Annual Report of NEG Micon, might have been refl ected in the English version with a translation of 'måles' by 'measured' instead of 'valued', as the changed Danish terminology builds on the changed English terminology 12 . 10 This appears from accounting standards (both UK/US standards and IASs) and from fi nancial statements published as STs in English. 11 Recoverable amount: The higher of an asset's net selling price and its value in use (IAS 36.5); genindvindingsvaerdi: for et aktiv er genindvindingsvaerdien den højeste vaerdi af kapitalvaerdien og salgsvaerdien fratrukket forventede omkostninger ved et salg. (Årsrapportens elementer, Defi nitioner, Bilag 1, Årsregnskabsloven 2001). 12 Applying the new terminology is important in that this signals the new approach to the presentation of fi nancial statements that stems from FASB and IAS. The item 'liabilities' is a broader concept in relation to the subordinate item 'provisions' that is defi ned as part of short-term or current lia bilities (see Example 2 above). The translation error occurs be cause of the translation of 'gaeld' into 'liabilities', because the term 'liabi l ities' is equivalent to 'forpligtelser' (cf. defi nitions in Figure 5 above). However, in choosing 'liabilities and shareholders' equity' for 'passiver', the translator provided a correct solution to the challenge of the Danish term, which carries the two semantic elements 'egenkapital' (shareholders' equity) and 'forpligtelser' (liabilities).
In Figure 6 below, the solid arrows show the items as presented in the format in the Danish Financial Statements Act; the broader concept 'liabilities' (missing in the format) above the narrower concepts 'provisions' and 'creditors' has been inserted between the dotted arrows in a parenthesis. Fig. 6: Tree diagram: balance sheet terminology, liabilities and equity (passiver). Glossary: Passiver = equity and liabilities; Forpligtelser = liabilities; Egenkapital = equity; Hensatte forpligtelser = provisions; Gaeldsforpligtelser = creditors/debt; Kortfristede gaeldsforpl. = shortterm creditors; Langfristede gaeldsforpl. = Long-term creditors).
The translator must be able to cope with problems like these, comparing defi nitions to ensure that the target reader will get a true and faithful view of the ST.

Investments and other assets Investments in subsidiaries and associated enterprises are stated in the Financial Statements of the Parent Company under the equity method, which required that a proportionate share of their annual net income or loss is refl ected in the Statements of Income of the Parent Company.
Finansielle anlaegsaktiver Kapitalandele i dattervirksomheder og associerede virksomheder vaerdiansaettes i moderselskabets regnskab efter den indre vaer dis me tode, således at der i resultat opgørelsen medtages en forholds maes sig andel af virksomhedernes resultat for året svarende til moderselskabets andel. The choice of US reporting language clearly appears from the text excerpt: 'Statements of Income' (US), not 'Profi t and Loss Account' (UK). The concept of associated enterprise is not found in US account ing terminology. A 20-50% fi xed asset investment (exercising signifi cant infl uence) is referred to as a 'minority active investment'. To retain a DK source text bias and achieve full equivalence with the Danish con cept 'associeret virksomhed', the translator had to reject the US term and opt for a term that is both internationally understood and equiv alent. The IAS concept 'associate' and the UK concept 'associated under taking' are fully equivalent to the DK concept of 'associeret virk somhed'. To maintain a US terminology bias and to opt for interna tional rather than UK English, the translator chose to combine 'associate' with the US and IAS term 'enterprise'. The UK/EU term 'undertaking' for 'virksomhed' was unacceptable, as 'enterprise' -being the US equivalent to 'undertaking' -is a term generally applied in the TDC Annual Report. Consistency in terminology was achieved and the Danish data were 'presented fairly'.
This example shows how the translator can solve the problem when the TT universe fails to have an equivalent term. The translation should always be true and faithful to the ST and avoid misleading the target reader with inappropriate and inconsistent concepts. The need for correct understanding of the TT (i.e. the ST) overrules consistency in US or UK terminology. Generally, three options exist when the translator is required to solve a lexical gap in a particular type of English: the translator may (a) fi nd an equivalent concept in international (IAS) English; (b) fi nd an equivalent term in another variety of English (US if UK and vice versa); or (c) 'translate' the Danish concept into an English term that may not exist as a defi ned concept, but which will embody the charac teristic features of the ST concept. The translator who is asked to use international English as the reporting language will naturally use IAS English accounting terminology inasmuch as this is possible. A true and faithful translation of the Danish ST may, however, make it necessary to avoid IAS terminology. This happens if an IAS term is not equivalent to the Danish accounting term.
The new Danish Financial Statements Act relies heavily on IAS. The choice of IAS terminology in an English translation of the Act is therefore justifi ed. Where IAS terminology 'by default' does not cover Danish concepts, the translation will apply UK or EU terminology. The EU has decided that listed companies in member countries must present fi nancial statements according to IAS by 2005, and the EC 4 th and 7 th Directives are being adjusted accordingly at the time of writing. To which extent the EU terminology will be changed remains to be seen.

Translation process and strategies
The discussion above illustrates the need for the translator to have extra-linguistic background knowledge: • about the ST context universe to be able to understand the ST, and • about the UK, US and international TT context. Clear insight into terminology and defi nitions used in UK, US and IAS accounting English is another prerequisite. The model below illustrates the translation process: In the following I apply the model to a translation of an annual report from Danish into English: The ST stems from a Danish company with a controlling US shareowner. The shares are traded both on the Copenhagen and New York Stock Exchanges. Obviously, this estab lishes a US TT universe, and the TT must appear in US English. Having decided this, the translator will now read through the ST and analyse it in terms of text genre (fi nancial report), style (important to preserve the style of the ST in the TT) and tone of voice: passive voice for facts and professional data, and active voice for management's views and responsibility statements. Any hedging in the ST must be maintained in the TT as fi nancial reports contain sensitive data. Figures must be represented with great accuracy. The translator must be loyal to the sender. The translator will rely on her/his linguistic expertise for high quality language in the TT and on his/her extra-linguistic background knowledge with a view to producing a true and faithful representation of the ST contents. To ensure equivalence, accounting terminology defi nitions of the ST must be carefully compared with those of the TT. Terms should never be chosen at random, even though the time factor is always a challenge. Where equivalence between particular concepts does not exist, the translator must carefully study the ST context to produce a TT that correctly reproduces the Danish contents to the target readers, in this case the US stakeholders and the US Securities and Exchange Commission with whom the annual report must be fi led.

Translator qualities
Much is required from the professional translator. Language expertise is a prerequisite, but not suffi cient. Extra-linguistic specialist background knowledge is a must, particularly in language for accounting purposes. Techniques for acquiring and sustaining such knowledge are essential for the professional translator. As pointed out by Gile (1995:141), it is important that the translator is able to assess knowledge acquisition requirements and possibilities before accepting an assignment. Therefore, self-awareness is important. The translator should refrain from accepting translations within subject areas that he or she does not master. To meet this challenge, the translator can specialise in certain sub ject areas. Financial reporting texts may be diffi cult to handle, but once the necessary accounting background knowledge is acquired, a wide array of assignments are open to the translator, bearing in mind that this background knowledge must of course be currently updated.
Other requirements include: experience, self-confi dence, loyalty to sender, openness to dialogue with client or commissioner (to ask questions, clarify understanding and discuss choice of English variety). To this can be added analytical thinking, problem solving and decisionmaking. After the analytical stage in the translation process, the translator must be experienced in fi nding quick answers to problems of understanding and in making prompt decisions about terminology. Not to forget the translator's challenge of time: most translation work is made against the clock. The panacea is adequate specialist background knowledge, appropriate strategies and tools, and the ability of quick decision-making to which must be added experience.

Translation tools
As fi nancial texts are quite complicated, adequate tools are important. Gile classifi es the translator's information sources into human and nonhuman sources and discusses the variables, weaknesses and strengths of the different sources (Gile 1995:133ff).   As tools, bilingual dictionaries may provide inspiration in that they sug gest an array of terms for translating the entry in question. However, defi nitions or characteristic features are seldom found in bilingual dictionaries. Therefore, such dictionaries must be used with great care by the translator. The choice of term from the range of translation suggestions must not be made at random. Therefore, bilingual dictionaries are useful as a starting point in the search for an adequate equivalent term. Suggested terms will next have to be checked in monolingual special subject dictionaries that defi ne each entry in question, enabling the translator to choose the equivalent term. Blind faith in bilingual dictionaries leads to errors and poor translation quality. The best tools are found in parallel texts and 'home-made' term bases furnished with defi nitions and comments based on the translator's own experience.
Translation memories (such as Translator's Workbench) of course al so provide a valuable tool for maintaining consistency in recurring translations of the same type.

The translator's challenges
Translations of fi nancial reporting texts are particularly challenging to the translator, not only because of the special fi nancial and accounting terminology and the requirements for extra-linguistic background knowledge of a diffi cult subject, but also because of the different genre types present in the text material. The annual report consists of various text genres: operating review, fi nancial review, statement by the management on the annual report, auditors' report, accounting policies, fi nancial statements: profi t and loss account, balance sheet, etc., and often also supplementary statements such as the environmental report, the intellectual capital report, and not least, the notes to the fi nancial statements. The translator must be familiar with the different tones of voice in the formal fi nancial statements with their particular accounting code language and in the operating and fi nancial reviews where the focus is on language and style. Furthermore, the translator must be able to advise the company/client on choice of variety of English and must master DK, UK, US and international (IAS) accounting terminology. For the translation process, the translator must have specialist background knowledge to understand the ST properly and produce a high quality TT. When annual reports must be submitted to the US author ities (the Securities and Exchange Commission -SEC), besides being presented to the US stakeholder, the translator is faced with the par ticular challenge of addressing two different target groups. This requires a change in the style of the contents in the annual report as presented to stakeholders, when presenting the same fi nancial data in the form 10-K 13 to the SEC. Surprisingly, this change may be from a formal style in the annual report to a more informal tone of voice in the 10-K! This process requires a thorough linguistic background knowledge and experience.

Conclusion
To produce high quality fi nancial reporting text translations, the translator will need a range of personal and professional qualities, extensive background knowledge, solid experience, and access to ad equate tools. A translation strategy is imperative. To this can be added the extra challenge with which the translator is faced: English is not even English. There are at least three important varieties in accounting language: UK, US and IAS English. A mixture of these must be avoided. The choice of TT language (variety of English) is a strategic decision that ideally rests with company management. Only then can the translator, as the communications and language expert, contribute effectively to the communicating of fi nancial reporting texts across continents.