International accounting

1. ACCOUNTING
SUBMITTED BY
H AR S H AD A N I R B H U VAN E ( 6 4 )
V I K R AN T PAWAR ( 7 2 )
T U S H AR D E R E ( 2 1 )
AJ E E T K U M AR ( 3 )
P R AF U L L J AD H AV ( 3 7 )
INTERNATIONAL

2. CONTENTS
I. INTRODUCTION
II. COUNTRY DIFFERENCES IN ACCOUNTING
III. ACCOUNTING CLUSTERS
IV. CONSEQUENCES OF ABSENCE OF COMPARABILITY
V. HARMONISATION OF DIFFRENCES
VI. ACCOUNTING FOR INTERNATIONAL BUSINESS
VII. ACCOUNTING ASPECTS OF CONTROL SYSTEMS

3. INTRODUCTION
INTERNATIONAL ACCOUNTING IS THE INTERNATIONAL ASPECTS OF ACCOUNTING, INCLUDING SUCH
MATTERS AS ACCOUNTING PRINCIPLES AND REPORTING PRACTICES IN DIFFERENT COUNTRIES AND
THEIR CLASSIFICATION; PATTERNS OF ACCOUNTING DEVELOPMENT; INTERNATIONAL AND REGIONAL
HARMONIZATION, FOREIGN CURRENCY TRANSLATION; FOREIGN EXCHANGE RISK; INTERNATIONAL
COMPARISONS OF CONSOLIDATION ACCOUNTING AND INFLATION ACCOUNTING; ACCOUNTING IN
DEVELOPING COUNTRIES; ACCOUNTING IN COMMUNIST COUNTRIES; PERFORMANCE EVALUATION OF
FOREIGN SUBSIDIARIES.
ACCOUNTING FUNCTIONS IN INTERNATIONAL FIRMS IS MORE COMPLICATED DUE TO:
VARYING EXCHANGE RATE
VARYING INFLATION RATES
DIFFERING CURRENCY CONTROLS
DIFFERING CUSTOM DUTIES
DIFFERING LEVEL OF SOPHISTICATION
CHANGING NATIONAL REQUIREMENTS

4. COUNTRY DIFFERENCES IN
ACCOUNTING
INTERNATIONAL ACCOUNTING STANDERDS COMMITTEE IS AN INTERNATIONAL
PRIVATE SECTORS ORGANISATION THAT SETS ACCOUNTING STANDERDS.
RESPONSIBLE FACTORS:
a. CULTURAL DIFFERENCES
b. RELATIONSHIP BETWEEN BUSINESS AND CAPITAL PROVIDERS
c. POLITICAL AND ECONOMIC TIES WITH OTHER COUNTRIES
d. HISTORIC COST vs INFLATION ACCOUNTING
e. LEVEL OF DEVLOPMENT

5. ACCOUNTING CLUSTERS
COUNTRIES ARE GROUPED
INTO THREE CLUSTERS
BRITISH AMERICAN
DUTCH CLUSTER
EUROPE –JAPAN
CLUSTER
SOUTH AMERICAN
CLUSTER

6. CONSEQUENCES OF ABSENCE
OF COMPARABILITY
DIFFERENT ACCOUNTING SYSTEM AND STANDERDS LED TO THE
ABSENCE OF COMPARABILITY OF FINANCIAL REPORTS FROM ONE
COUNTRY TO ANOTHER COUNTRY.
IMPACT OF ABSENCE OF COMPARABILITY
IMPACT ON CAPITAL MARKET
IMPACT ON CORPORATE FINANCIAL CONTROLS

7. HARMONISATION OF
DIFFERENCES
DIFFERENT ACCOUNTING STANDERS SHOULD BE HARMONISED FOR:
COMPATIBILITY WITH NEEDS OF INVESTORS
CREATING EASY AND FASTER ACCESS TO INVESTMENT
OPPORTUNITIES
OPPORTUNITY TO MNCs TO PRODUCE CAPITAL
STANDERD ACCOUNTING PROCEDURES WITH POLITICAL
HARMONISATION
TO HAVE UNIFORM ACCOUNTING FOR MNCs

8. ACCOUNTING IN
INTERNATIONAL BUSINESS
ACCOUNTING FOR INTERNATIONAL
BUSINESS
ACCOUNTING FOR
TRANSACTON IN
FOREIGN
CURRENCIES
FOREIGN CURRENCY
TRANSLATION

9. FOREIGN CURRENCY
TRANSLATION
THE CURRENT RATE METHOD
THE TEMPORAL METHOD
THE CURRENT RATE METHOD:
THE FINANCIAL STATEMENT OF A FOREIGN
SUBSIDIARY ARE TRANSLATED INTO THE HOME
CURRENCY WITH THE EXCHANGE RATE THAT
PREVAILED ON THE DAY OF BALANCE SHEET.
THE TEMPORAL METHOD :
THE VALUE OF ASSETS OF A SUBSIDIARY IS TRANSLATED INTO HOME COUNTRY CURRENCY USING THE
EXCHANGE RATE THAT EXISTS ON THE DAY OF PURCHASING THAT PARTICULAR ASSETS.
FUNCTIONAL CURRENCY
LOCAL CURRENCY
OF THE
SUBSIDIARY
CURRENT RATE
METHOD
REPORTING
CURRENCY OF
THE PARENT
TEMPORAL
METHOD

10. ACCOUNTING ASPECTS OF
CONTROL SYSTEMS
ACCOUNTING
ASPECTS OF
CONTROL
SYSTEMS
BUDGETS
EXCHANGE RATE
CHANGES
TRANSFER
PRICING

11. BUDGETS:
BUDGETS MAY BE EXPRESSDED IN THE LOCAL CURRENCY OR THE PARENT COUNTRY OR
BOTH.
EXCHANGE RATE CHANGES AND CONTROL SYSTEMS:
THE LESSARD AND LORANGE MODEL:
a. INITIAL RATE
b. THE PROJECTED RATE
c. THE ENDING RATE
TRANSFER PRICING AND CONTROL SYSTEMS:
SUBSIDIARIES TRANSFER THE MATERIAL AND SERVICES FROM ONE COUNTRY TO ANOTHER.
CONT

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