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BUS 5644 International Accounting and Reporting

Course Description

This course provides background in international accounting, reporting standards and business operations in a global environment. Includes international financial reporting standards (IFRS). Also includes a comparison of U.S. generally accepted accounting principles (GAAP) and IFRS to develop and enhance critical thinking in financial accounting and reporting.

Course Objectives

Upon completion of this course, students should be able to

  • Evaluate the difference between reporting and auditing standards in different countries
  • Acquire in-depth skills for interpreting financial information compiled using different national accounting standards and those compiled using International Financial Reporting Standards
  • Compare the available foreign currency translations methods and their appropriateness for different business or market conditions
  • Explain the effects of general price-level changes and exchange rate fluctuations on the information quality of financial statements
  • Analyze unique issues of international business strategies and cross-country financial analyses
  • Distinguish between accounting exposure and economic exposure and appreciate the risks associated with each

Week 1

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

Week 2

Lecture: IFRS


  • 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

Week 3

Lecture: Stock Exchanges


  • 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


  • 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

Week 5

Lecture: Problems Adoption of International Standards Won't Solve


  • 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

Week 6

Lecture: International Performance Evaluation


  • 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

Week 7

Lecture: Hedging Basics


  • 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

Week 8

Lecture: The Role of Transfer Pricing in Tax Planning


  • 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

The course description, objectives and learning outcomes are subject to change without notice based on enhancements made to the course.