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International Accounting
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International Accounting

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  1. International Accounting

  2. An International Perspective on Financial & Managerial Accounting • Impact of Accounting Differences • History and Background • Environmental Factors • Classification of Approaches • Representative Accounting Issues

  3. Impact of Accounting Differences • Quality of External and Internal Decision Making • Assessment of Competitors and International Opportunities • Foreign Investment & Access to Capital • Global Privatization

  4. Accounting Development: Background • Earliest References @ 3500 BC. • The Crusades & International Trade • 14th C. Italy: • Double Entry Accounting • Fr. Luca Pacioli • Antecedents • Writing/Arithmetic/Money/Private Property/ Partnerships/Credit/Capital Accumulation

  5. Accounting Development: Background • Migration • Italy Spain Portugal France England • International Trade & Operations • 16th & 17th C. Colonialism • Industrial Revolution • From Proprietor to Partnership to Limited Liability Corp to Large Stock Company • Massive Capital Requirements for RRs & Canals

  6. Factors Affecting Accounting Development • Culture • International Political & Economic Ties • Economic/Political/Legal Systems • Relationship between business & providers of capital

  7. Environmental Factors: Culture • Educational • Literacy • Secondary & Higher education • Vocational & Technical Training • Social • Conservatism • Secrecy/Distrust • Religion based principles • Fatalism

  8. Environmental Factors • Economic/Political/Legal • Level of Development • Agricultural/Industrial/Service • International Ties • Inflation • Individual Freedom/Government Control • Property Ownership • Code vs. Common Law

  9. International Political & Economic Ties • Colonial Relationships • British Commonwealth • France • Holland • Spain • Soviet Union • Other Relationships • European Union • NAFTA • ASEAN • South America

  10. Business & Providers of Capital • Investors & Creditors • Few or Many • Who are they? • Relationship between Management & Investors/Creditors • Capital Markets • Stock & Bond market development & sophistication • Use of International financial markets

  11. Accounting Approaches • Macro-Economic: Accounting regarded as a tool to further national economic objectives determined & promulgated by government • accounting information & reports serve the government’s objectives • law & taxes specify framework for reporting • compliance & tax accounting dominate • uniformity supersedes judgment • Sweden/Germany/Italy/France/Belgium/Spain/Japan

  12. Accounting Approaches • Micro-economic: Economy & Nation Prosper as Individual Enterprises & Companies Prosper • accounting information & reports assess the performance & efficiency of the enterprise • economic theory & pragmatism provide the framework for reporting • law encourages sound business practices • accountants & auditors use “best judgment” to assess & report • Netherlands/UK/US/Canada/Mexico

  13. Accounting Clusters • British/American • Oriented toward decision needs of investors & creditors • non legalistic, “substance over form” • Continental • designed to satisfy government imposed requirements • legalistic & conservative • South American • similar to Continental + “inflation” • Mixed Economy • combination of central planning & market economy • International Standards

  14. International Accounting Issues • Consolidations & Currency Gains & Losses • Mergers & Acquisitions • Capitalization • R&D/Fixed Assets/Leases/Goodwill • Inventory & Reserves • Pension & Health Care Liabilities • Taxes • Performance Measurement Systems • Auditing