International Accounting :International Accounting


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


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


Accounting Development: Background :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


Accounting Development: Background :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


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


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


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


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


Business & Providers of Capital :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


Accounting Approaches :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


Accounting Approaches :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


Accounting Clusters :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


International Accounting Issues :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