BUS 5644 International Accounting and Reporting

Lecture: Overview of International Accounting

Lecture: The Internationalization of Accounting

• Explain how international accounting is distinct from domestic accounting
• Define the term accounting diversity
• Identify the factors that are contributing to the internationalization of the subject of accounting
• Explain the historic development of international accounting
• Compare how foreign direct investment activities differ from international trade and the implications of this difference for accounting
• Identify several internal and external reporting issues that arise when businesses and investments transcend national borders
• Explain what is meant by global capital markets and what this development means for capital market participants
• Name and explain the importance of the major factors that have influenced the development of distinct national accounting schemes
• List the primary characteristics of the different approaches to accounting in market-oriented western economies, their primary characteristics and the countries where each is prevalent
• Compare accounting classifications with one another
• Explain the difference between the users that are the focus of the primary types of accounting and name countries where each is prevalent
• Explain why distinctions of accounting at the national level are becoming blurred
• Identify the major factors that have influenced accounting development and explain their importance
• Name the primary accounting classifications
• Distinguish between fair presentation and legal compliance focus of accounting

Lecture: IFRS

Outcomes

• Explain how financial reporting is regulated and enforced in ten different countries in Europe, the Americas, and Asia
• Describe the key similarities and differences among the accounting systems of these ten countries
• Identify the use of International Financial Reporting Standards at the individual company and consolidated financial statement levels
• Describe the audit oversight mechanisms in these ten countries
• Explain the difference between principle-based and rules-based accounting standards
• Explore the complications of making a change from national accounting standards to IFRS
• Identify the barriers to adoption of any single set of accounting rules

Lecture: Stock Exchanges

Outcomes

• Distinguish between voluntary and mandatory disclosures and their regulation
• Identify the broad objectives for accounting disclosure systems in investor-oriented equity markets
• Discuss “triple bottom line” reporting and why it is growing in importance
• Examine the practices and disclosures of forward-looking information, segment activity, social responsibility reporting, special disclosures for non-domestic users, and corporate governance disclosures

Week 4

Lecture: An Introduction to Exchange Rate Fluctuation and the Effect on Financial Reporting

Outcomes

• Explain why firms translate from one currency to another
• Distinguish between a spot, forward, and swap transaction
• Discuss the exchange rates used in the currency translation process and what are their financial statement effects
• Contrast translation gain or loss with transactions gain or loss
• Name and highlight the different ways of translating financial statements from one currency to another
• Explain the relationship between currency translation and inflation
• Show how the temporal method of currency translation differs from the current rate method
• Discuss why financial statements may be misleading during periods of changing prices
• Name and highlight various ways of adjusting financial statements for changing prices
• Explain the restate-translate controversy
• List the conditions that make it possible to double-count for the effects of foreign inflation

Lecture: Problems Adoption of International Standards Won't Solve

Outcomes

• Define and understand the distinction between harmonization and convergence as they apply to accounting standards
• State the pros and cons of adopting international accounting standards
• Understand what is meant by reconciliation and mutual recognition of different sets of accounting standards
• Identify the six organizations that have leading roles in setting international accounting standards and promoting international accounting convergence
• Describe the structure of the International Accounting Standards Board and how it sets International Financial Reporting Standards
• Understand the major provisions of the U.S. Sarbanes-Oxley Act and why similar legislation is being enacted in other countries
• Describe a logical approach to analyzing foreign financial statements
• Explain why it is difficult to undertake an international business strategy analysis
• Name some common steps to examining foreign accounting practices
• Show how cross-country variations in accounting measurements, disclosure practices, and auditing standards can impact one’s analysis of foreign financial statements
• Explain what international prospective analysis entails and describe and why is it difficult to perform in an international setting
• Discuss common pitfalls to avoid when conducting cross-country ratio analysis
• List some of the issues international standards will not solve
• Explain why adopting international standards will not address many continuing concerns

Lecture: International Performance Evaluation

Outcomes

• Name the critical dimensions of business modeling
• Explain how to measure the returns on a foreign investment and how it differs from the domestic case
• Be able to calculate a multinational company’s cost of capital
• Describe the issues involved in designing multinational information and control systems
• Explain the meaning of financial control and name some international control issues
• Explain how Kaizen costing differs from traditional standard costing concepts
• Perform an exchange rate variance analysis
• Name some approaches employed by multinational companies to cope with exchange rate changes and inflation in performance evaluation of foreign operations
• Identify some of the primary issues in international performance evaluation
• List the characteristics of a good performance evaluation tool
• Discuss the cultural implications of adopting a performance evaluation system in a multi-national company

Lecture: Hedging Basics

Outcomes

• Describe the scope of risk management entail
• Name and define the various types of market risks that international financial managers encounter
• Identify four tasks involved in managing foreign exchange risk
• Compare and contrast translation exposure to transaction exposure
• Explain what a financial derivative is and how is it measured
• Identify three types of foreign currency hedges and their accounting treatments recommended by IAS 39 and FAS 133
• Explain what a hedge is
• Discuss the situations in which they are used
• List the basics of how they work

Lecture: The Role of Transfer Pricing in Tax Planning

Outcomes

• Identify the major types of tax systems that exist around the world
• Examine what determines a multinational entity’s effective tax burden
• Explain concepts relating to the taxation of foreign source income and the rationale behind the foreign tax credit
• Identify the major variables that complicate international transfer pricing
• Explain the meaning of arm’s-length price and the transfer pricing methods designed to achieve it
• Discuss the concept of an advance pricing arrangement
• Explain how transfer prices are established
• Describe their use in minimizing total tax consequences