International
Accounting
International
Accounting : A User
Perspective is designed to provide an understanding of international accounting
issues to current and future business managers. With the problems exposed in
the quality of financial reporting in many countries, a solid understanding of
international accounting issues is an important part of the portfolio of skills
that managers in medium and large enterprises must possess.
As business and capital markets continue to grow more
global, the need for cross-border financial information has correspondingly
increased. And, as IFRS gets closer to becoming a reality in the United States,
international accounting has been brought to the forefront in both the academic
and the practitioner markets
DIFFERENCES
INTERNATIONAL ACCOUNTING WITH OTHER ACCOUNTING AND ANALYSIS OF FINANCIAL
STATEMENTS
Along with business and financial markets that have a
lot to internationalization, as well as differences in international accounting
is becoming more important from the standpoint of financial statement analysis
international. The key questions include the direction of international
accounting differences that affect the assessment of income and cash flow in
the future and of the risks and uncertainties allies.
Appraisal / valuation is important for portfolio
investors. It is important to the attention of enterprises with foreign direct
investment (FDI) / Foreign direct investment, which involves an assessment of
potential acquisition and joint venture participation or increase of capital of
companies listed on foreign stock markets. Growing number of companies listed
in international stock markets, with London Stock Exchange that have been taken
over by the New York stock exchanges as the most popular stock exchanges, and more
stock market continues to grow. In addition there was an emergence of a
dramatic increase of the stock market and the competition for international
investment.
International accounting differences bring a number
of problems from the standpoint of financial analysis. First, in an effort to assess foreign companies, there is a
tendency to look at revenues and other financial data from the standpoint of
their home country, and because of the danger of ignoring the effects of
accounting differences. Unless significant difference was taken into account,
possibly with some involvement of a restatement, it may have very serious
consequences. Secondly, awareness of
international differences suggest the need to become familiar with generally
accepted accounting principles as a destination for foreign countries to know
better income data in the context of measurement. Third, the issue of properties that can be compared and harmonized
accounting is reviewed in the context of alternative investment opportunities. Difference that arise due to : Economic
growth, Inflation, Political system, Education, Accounting Proffesion, Tax
laws, Money Market and Capital. In this case, Choi and Levich (1991)
provides a useful framework for analyzing the impact and relevance of the differences
in similarity and no resemblance to the economic environment. In an environment
or a situation similar to the accounting, the accounting differences is un
logisan and clues to the results that can not be compared. Logical practices
suggest that the accounting treatment of similar / same. When the economic
environment is not the same, but, as in the case of international investment,
accounting differences can be justified, particularly where lies the lack of
similarity exists in company laws, tax laws, finance, business customs,
culture, accounting and so on. On the other hand, a similar accounting
treatment may be justified when several factors have some significant
similarities. Understanding the importance of environmental factors and
cultural / cultural are all concerned.
In a survey to examine how capital market
participants respond to differences in accounting, Choi and Levich cited the
opinion of institutional investors, multinational companies that issued
securities, the bank under the international securities, and regulatory
agencies. Only 48% of all respondents interviewed were influenced by
differences in international accounting, but it seems 52% of respondents who
claimed not affected by differences in accounting facts "coping" a
variety of factors, including :
(1) repeat their own accounts with GAAP,
(2) the development of capabilities foreign GAAP,
(3) using other information sources, and
(4) using a different approach investasu, for
example, macro-economic approach "top-down" or from the top down to
the state paired with a diversified selection of stocks in the country.
A similar
approach, used by the respondents which investment decisions likely influenced
by differences in accounting. The results of this study suggest that the problems
and costs arising from differences in international accounting is very real and
needs to be investigated further to be investigated and resolved. In the end,
there is a clear need to see the differences and their impact on the
measurement of income and corporate performance.
MAJOR
DIFFERENCES IN ACCOUNTING PRINCIPLES IN THE WHOLE WORLD
The existence of accounting differences across the
world are no doubt significant enough to make the work of financial analysts is
very difficult in a period of making international comparisons.
If we now focus on some key measures in the selection
of a few large countries like the U.S., the EU (including British, Dutch,
French and German), Brazil, Switzerland, China and Japan, we can see the
variation of the principles used can different accountancy affect to the income and assets.
For some countries, which are representative in the
identification of the classification of culture has previously been discussed
in chapter 3 & 4, also accounting principles relating to the selection of
the key measurements are presented on a comparative basis. This conclusion can
be seen from some of the differences in various countries.
With respect to the basis of measurement used, the
application of historical cost are generally conservative in the requirements
made in the European Union, there is a tendency for a more flexible approach,
particularly in the UK and the Netherlands. In two countries, the cost histors
periodically revalued at market value with the modification or replacement cost
and especially in the case of land and buildings and equipment.
Accounting depreciation in the U.S. and the EU,
particularly in the UK is based on the concept of value to the economic life,
which in other countries such as France, Germany, Switzerland and Japan, tax
laws generally encourage a faster method.
Measurement of inventories is generally based on the
principle of "lower of cost and market" but with some variations in
the assessment of the significance of the market, it is, "net realizable
value" or replacement cost. LIFO is also sometimes time is allowed for tax
purposes (for example Japan and the U.S.), but more often not (eg European
Union). Diakuntansikan general construction contract using the
"percentage-of-completion". But the complete contract method is used
the more conservative in Switzerland, China and Germany.
The cost of the research and development / Research
and Development (R & D) is usually removed more quickly in the
Anglo-American countries and Germany. Although I Brazil a more flexible
approach has been adopted in general. Permissive approach is also adopted in
general to the capitalization of borrowing costs of the asset.
The treatment of pension benefits also are generally
diakuntasikan the basis of increased / or proyeks benefits to be paid to
employees, in contrast to Brazil and China are using the opposite method.
The treatment of taxation is a major area of
difference in measurement of accounting income to be strongly influenced by tax
rules in France, Germany, Switzerland, and Brazil.
The treatment of business combinations throughout the
world varies depending on less or more shall the method of
"pooling-of-interest" or collection of interest, this method is used
as a requirement or allowed depending on certain circumstances. But it also
required the purchase method in general. In Brazil, China and Japan
amortization methods required and the contrast with the United States and
Britain, where mertode amortization is not required but do feasibility tests.
Relating to goodwill, other things such as brands,
publicity rights, and patents, which generally capitalized, except in
Switzerland, but the subject is usually amortized, if not then held the test of
eligibility.
Finally, matters relating to foreign currency
translation is important in its aim to get the measurements to choose between
the average or closing rates.
Despite the growing concerns over the difference
principle and practice internationally pengukurann, less is known about the
overall impact of the difference accounting on income and shareholder's equity.
Even so, differences in the various aspects of accounting measurement may have
been compensated for each other so widely total effect is not significant.
Despite the very limited research done on the
quantitative impact of international accounting differences, there is strong
evidence of a relationship with the U.S. accounting principles in the UK, some
European Union countries, and Japan.
THE ROLE OF ACCOUNTING
IN THE AREA OF GLOBAL
Some trigger the emergence of international accounting
can be described as follows:
1. One of the main drivers of the emergence of international accounting is the extent and magnitude of the operating range and MNC (Multi National Corporation). MNC with Greater range, it will affect the international money and capital markets as well as business and financial transactions Various accompany That Such forward by Jacoby (1970) about the change of scale domestic enterprises into the international scale:
a. Developments led the company imports raw materials from abroad and export to international markets
b. Opening branches overseas sales
c. Company provides licensing or franchising
d. Ownership of overseas companies through partial ownership, joint ventures, ownership of all
e. Management with multi-organization
f. Companies owned by some multinational companies
2. Overseas investments by the company, investors, Governments and so on
3. Financial fluctuations Caused by changes in the international financial system leads to the emergence That of the risk of exchange rate changes That require accounting information
4. Increasing the price of natural resources and commodities as well as monopoly
5. Increasing economic growth and aspirations of the third world
6. The Increasing role of capital markets. From the aspect of Global Capital Markets found a variety of Important indicators That will inevitably require international accounting
Some indicators are as follows:
a. Cash flow from current transactions overseas was 1.4 trillion U.S. dollars per day
b. There is a Tendency of Increasing the volume of capital markets
c. There is a trend of consolidation and integration of world capital markets due;
d. Reduce transaction cost
e. Liquidity problems
f. The bigger the better the stock market
7. Vision changes in capital market, it is characterized by:
a. Use of Decimal Pricing in the exchange transaction
b. Emerging markets are interrelated or linked exchange
c. Use of Electronic Trading System in the entire capital market
d. The existence of Global Accounting Standard single global standard
e. No more borderless country borders
8. Capital Markets USA
American capital markets Including the stock market is fast Becoming the most global markets. In 1999 the stock market NYSE (New York Stock Exchange) there are 1200 foreign-listed companies (listed) in U.S. capital markets from 56 countries. Imagine all these companies must comply with the country accounting standards. From 56 countries have 56 accounting standards the which differ from each other, and is 32% of the total market capitalization (market capitalization) on the NYSE.
1. One of the main drivers of the emergence of international accounting is the extent and magnitude of the operating range and MNC (Multi National Corporation). MNC with Greater range, it will affect the international money and capital markets as well as business and financial transactions Various accompany That Such forward by Jacoby (1970) about the change of scale domestic enterprises into the international scale:
a. Developments led the company imports raw materials from abroad and export to international markets
b. Opening branches overseas sales
c. Company provides licensing or franchising
d. Ownership of overseas companies through partial ownership, joint ventures, ownership of all
e. Management with multi-organization
f. Companies owned by some multinational companies
2. Overseas investments by the company, investors, Governments and so on
3. Financial fluctuations Caused by changes in the international financial system leads to the emergence That of the risk of exchange rate changes That require accounting information
4. Increasing the price of natural resources and commodities as well as monopoly
5. Increasing economic growth and aspirations of the third world
6. The Increasing role of capital markets. From the aspect of Global Capital Markets found a variety of Important indicators That will inevitably require international accounting
Some indicators are as follows:
a. Cash flow from current transactions overseas was 1.4 trillion U.S. dollars per day
b. There is a Tendency of Increasing the volume of capital markets
c. There is a trend of consolidation and integration of world capital markets due;
d. Reduce transaction cost
e. Liquidity problems
f. The bigger the better the stock market
7. Vision changes in capital market, it is characterized by:
a. Use of Decimal Pricing in the exchange transaction
b. Emerging markets are interrelated or linked exchange
c. Use of Electronic Trading System in the entire capital market
d. The existence of Global Accounting Standard single global standard
e. No more borderless country borders
8. Capital Markets USA
American capital markets Including the stock market is fast Becoming the most global markets. In 1999 the stock market NYSE (New York Stock Exchange) there are 1200 foreign-listed companies (listed) in U.S. capital markets from 56 countries. Imagine all these companies must comply with the country accounting standards. From 56 countries have 56 accounting standards the which differ from each other, and is 32% of the total market capitalization (market capitalization) on the NYSE.
COMPARATIVE ACCOUNTING is accounting regulations or rules (including also the legal basis
budget) governing the preparation of financial statements. Standard setting is
the process of formulation or the formulation of accounting standards.
Accounting standards is the result of standard setting. But in practice is
different from the standard That specified by. There are Four Reasons That
explain, Among others:
1) In most countries the penalty for
Disobedience to be weak and not accounting provisions effective.
2) The
company may voluntarily report more information than required.
3) Some
states allow companies to ignore the accounting standards do if the operation
and the company's financial position will be presented better results
4) In some
countries, accounting standards apply only to the financial statements
independently, and not to report consolidated.
Setting
accounting standards Generally involve a combination of private and public
sector groups. The Relationship Between accounting standards and accounting
process very complicated and not always move in the same direction. In the
second chapter of accounting orientation to distinguish Between fair presentation
versus law compliance. Reasonable accounting presentation usually associated
with the common law countries, while accounting is generally found legal
compliance in code law countries. This difference is seen in the standard
setting process, in the which the private sector is more Influential in the
state of law a fair presentation, while the public sector more influence with
the country code law legal compliance.
SIMILARITIES AND DIFFERENCES IN ACCOUNTING SYSTEM
DEVELOPED COUNTRIES
Convergence of accounting standards is essentially equating the language
of business.Each state has a regulatory agency financial reporting
standards. Institute of Accountants Indonesian has issued Statement of
Financial Accounting Standards as the only standard That is accepted as
'business language' companies in Indonesia. United States has a Generally
Accepted Accounting Principles (GAAP), the which was released by the Financial
Accounting Standards Board (FASB). The European Union has the
International Accounting Standard (IAS) issued by International Accounting
Standard Board (IASB). And so, each country using a standard
reporting-reporting standards That are Likely to diverge from one
another. There is no assurance That the financial statements are Presented
in different countries can be read with the same language. Difference in
the end of this standard will also almost international business people in
business decisions.
By far the leading to the reference standard is the International Financial Reporting Standards (IFRS) issued by International Accounting Standard Board (IASB). IASB standards are the governing body of International Accounting Standards Committee Foundation, an independent international non-profit institutions engaged in financial reporting is based in the UK.
Today, more than 100 countries require or allow the application of IFRS has, and is expected to be more and more countries around the world use IFRS. In fact, 10 countries have global capital markets has made convergence to IFRS as Japan, Britain, France, Canada, Germany, Hong Kong, Spain, Switzerland, Australia, Including the superpower United States has said it will the make the convergence to IFRS. As can be seen on the map, the blue states are the countries require or permit That have the application of IFRS. While the gray That are the countries are in the process of convergence with IFRS.
For Indonesia, as a first step the Financial Accounting Standards Board Indonesia Institute of Accountants (DSAK-IAI) will convergence with IFRS GAAP to it fully through three stages, namely stages of adoption, the final preparation phase and implementation phase. Stages of adoption made in the period 2008-2011 includes activities throughout the IFRS to GAAP adoption, infrastructure preparation, and evaluation of IAS regulations.
Of course not easy to reconcile IAS 62 standards of the which is owned by owned 37 IFRS standards. There are still considerable gaps Between GAAP with IFRS, there are even 20 or 32% IAS standards That can not be compared. When compared with the IFRS, there are still significant differences include financial instruments, investment property, business combination, property, plan and equipment, intangible assets, service concession agreement, the presentation of financial statements, leases, insurance contracts, accounting for banking to be removed, exploration and evaluation of mineral assets, agriculture, and accounting for reporting currencies, and other major differences.
"That IFRS convergence targets have been launched IAI in 2012 is revised IAS That are materially in accordance with IFRS version of January 1, 2009 the which Became effective in 2011/2012," said the Chairman of IAI Rosita DSAK Uli Sinaga Public Hearing on the exposure draft of IAS 1 (Revised 2009) of the Financial Statements, in Jakarta last Thursday, August 20, 2009. For the twenty-ninth of Financial Accounting Standards (GAAP) included in the IFRS convergence program launched by IAI DSAK 2009 and 2010. The number of standards to be Implemented in the convergence program is a tough challenge for the period 2009-2012 DSAK IAI. If the experience of the implementation of SFAS 50 and 55 Concerning financial instruments have been published That in 2008, but it gets the strong pressure of the unpreparedness of the financial industry have delayed its implementation That, then you can imagine how powerful enact Dozens of standards in Such a short time.
In Addition to the readiness of the companies, the implementation of this program also requires the readiness of practitioners of Management Accountants, Public Accountants, academics, and other support professionals Regulators Such as actuaries and appraisers. Public Accountants are expected to Immediately update Their knowledge in relation to changes in GAAP, SPAP update and adjust the IFRS-based audit approach. Management Accountant / Company can anticipate Immediately formed a team of Successful convergence of IFRS Accountant in charge of updating the knowledge of management, conduct gap analysis and prepare a road map for IFRS convergence and coordination with other projects for the optimization of resources.Accounting Academics / University are expected to form a Successful Team of IFRS convergence to update the knowledge of academics, Revising the curriculum and syllabus as well as perform a variety of related research and Provide input / comments on the ED and the Discussion Papers published by the IASB DSAK well.
Regulators need to the make adjustments to regulations related to financial reporting and taxation and Make Efforts toward professional development and supervision associated with the reporting keuanganseperti appraisers and actuaries. Industry associations are expected to develop Guidelines for Industrial Accounting in accordance with GAAP developments, and create a forum intensively That Is Discussed Various issues with respect to the impact of the application of GAAP and proactively Provide input / comments to DSAK IAI.
By far the leading to the reference standard is the International Financial Reporting Standards (IFRS) issued by International Accounting Standard Board (IASB). IASB standards are the governing body of International Accounting Standards Committee Foundation, an independent international non-profit institutions engaged in financial reporting is based in the UK.
Today, more than 100 countries require or allow the application of IFRS has, and is expected to be more and more countries around the world use IFRS. In fact, 10 countries have global capital markets has made convergence to IFRS as Japan, Britain, France, Canada, Germany, Hong Kong, Spain, Switzerland, Australia, Including the superpower United States has said it will the make the convergence to IFRS. As can be seen on the map, the blue states are the countries require or permit That have the application of IFRS. While the gray That are the countries are in the process of convergence with IFRS.
For Indonesia, as a first step the Financial Accounting Standards Board Indonesia Institute of Accountants (DSAK-IAI) will convergence with IFRS GAAP to it fully through three stages, namely stages of adoption, the final preparation phase and implementation phase. Stages of adoption made in the period 2008-2011 includes activities throughout the IFRS to GAAP adoption, infrastructure preparation, and evaluation of IAS regulations.
Of course not easy to reconcile IAS 62 standards of the which is owned by owned 37 IFRS standards. There are still considerable gaps Between GAAP with IFRS, there are even 20 or 32% IAS standards That can not be compared. When compared with the IFRS, there are still significant differences include financial instruments, investment property, business combination, property, plan and equipment, intangible assets, service concession agreement, the presentation of financial statements, leases, insurance contracts, accounting for banking to be removed, exploration and evaluation of mineral assets, agriculture, and accounting for reporting currencies, and other major differences.
"That IFRS convergence targets have been launched IAI in 2012 is revised IAS That are materially in accordance with IFRS version of January 1, 2009 the which Became effective in 2011/2012," said the Chairman of IAI Rosita DSAK Uli Sinaga Public Hearing on the exposure draft of IAS 1 (Revised 2009) of the Financial Statements, in Jakarta last Thursday, August 20, 2009. For the twenty-ninth of Financial Accounting Standards (GAAP) included in the IFRS convergence program launched by IAI DSAK 2009 and 2010. The number of standards to be Implemented in the convergence program is a tough challenge for the period 2009-2012 DSAK IAI. If the experience of the implementation of SFAS 50 and 55 Concerning financial instruments have been published That in 2008, but it gets the strong pressure of the unpreparedness of the financial industry have delayed its implementation That, then you can imagine how powerful enact Dozens of standards in Such a short time.
In Addition to the readiness of the companies, the implementation of this program also requires the readiness of practitioners of Management Accountants, Public Accountants, academics, and other support professionals Regulators Such as actuaries and appraisers. Public Accountants are expected to Immediately update Their knowledge in relation to changes in GAAP, SPAP update and adjust the IFRS-based audit approach. Management Accountant / Company can anticipate Immediately formed a team of Successful convergence of IFRS Accountant in charge of updating the knowledge of management, conduct gap analysis and prepare a road map for IFRS convergence and coordination with other projects for the optimization of resources.Accounting Academics / University are expected to form a Successful Team of IFRS convergence to update the knowledge of academics, Revising the curriculum and syllabus as well as perform a variety of related research and Provide input / comments on the ED and the Discussion Papers published by the IASB DSAK well.
Regulators need to the make adjustments to regulations related to financial reporting and taxation and Make Efforts toward professional development and supervision associated with the reporting keuanganseperti appraisers and actuaries. Industry associations are expected to develop Guidelines for Industrial Accounting in accordance with GAAP developments, and create a forum intensively That Is Discussed Various issues with respect to the impact of the application of GAAP and proactively Provide input / comments to DSAK IAI.
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