Choi/Meek, 6/e
12
•Financial innovation
Identifying potential market risks Quantifying trade-offs associated with
alternative risk reduction strategies Measuring risk exposures Accounting for specific hedge products Evaluating the effectiveness of hedging
Choi/Meek, 6/e
4
International accounting (defined): same as above except that the firm being reported on is a multinational company with operations and transactions that cross national boundaries or an entity with reporting obligations to non-domestic readers.
programs
Choi/Meek, 6/e
13
Contributing Factors (contin)
Global competition
Competitive benchmarking necessitates international comparisons.
Choi/Meek, 6/e
14
Choi/Meek, 6/e
15
Contributing Factors (contin)
Cross-border mergers and acquisitions
Corporate valuation is a function of accounting measurements that vary from country to country.
Choi/Meek, 6/e
16
Choi/Meek, 6/e
17
Contributing Factors (contin)
Reporting issues associated with internationalization of capital markets
How to analyze and interpret foreign accounts? How to report to foreign readers? How to harmonize reporting standards
Consolidation of foreign accounts Accounting for foreign currency fluctuations Accounting for changing prices International planning and control Performance evaluation of foreign operations Financial risk management International taxation and transfer pricing
Choi/Meek, 6/e
6
Contributing Factors
Accounting’s international heritage
Double-entry originates in the Italian city states.
Bookkeeping spreads to Germany and assists the spread of capitalism.
International Accounting, 6/e Frederick D.S. Choi Gary K. Meek
Chapter 1: Introduction
Choi/Meek, 6/e
1
Learning Objectives
How is international accounting distinct from domestic accounting?
internationally?
Choi/Meek, 6/e
18
Other Chapter Exhibits
Choi/Meek, 6/e
19
Chapter Exhibits (contin)
Choi/Meek, 6/e
20
Chapter Exhibits (contin)
Choi/Meek, 6/e
Dutch enhance income measurement.
Choi/Meek, 6/e
7
French use accounting for governmental planning and control.
Double entry assists the British in managing and controlling commercial interests in the colonies.
9
Contributing Factors (contin)
Growth and spread of multinational operations
Choi/Meek, 6/e
10
Choi/Meek, 6/e
11
Contributing Factors (contin)
Reporting issues when business transcends national boundaries
Choi/Meek, 6/e
5
What Does International Accounting Diversity Entail?
Measurement principles Financial disclosure (corporate transparency) Auditing practices
Choi/Meek, 6/e
2
What external and internal reporting issues arise when business and investing transcend national borders?
What is meant by the term, global capital markets, and what does development mean for capital market participants?
Choi/Meek, 6/e
3
What is International Accounting?
Domestic accounting: an information specialty providing information about a firm to users of that information as a basis for economic decisions.
Accounting plays a major role in the U.S. industrial revolution.
Choi/Meek, 6/e
8
Contributing Factors (contin)
Paradox of international accounting
In many countries, accounting remains a nationalistic affair.
Accounting serves people and institutions whose decisions are international in scope.
Accounting diversity creates a demand for harmonization.
Choi/Meek, 6/e
21
Chapter Exhibits (contin)
Choi/Mts (contin)
Choi/Meek, 6/e
23
What does international accounting diversity entail?
Does international accounting have a history?
What factors are contributing to the importance of international accounting as a field of study?
E.g., the e in p/e valuation multiples.
Internationalization of capital markets
Raising external finance abroad means that financial reports must increasingly travel internationally.