As the international bookkeeping course is getting more and more common, the art of international trade has existed for thousands of years. What has been causing new challenges in international accounting over the past decades, the growth in international business and the growth of new business that did not exist in the past. Furthermore, although there are no significant differences between the United States and other countries' accounting systems. Understanding these differences can help you business around the world.
Accounting is an integral part of any successful business in the world. Allows you to track money entering and leaving your business, which is an essential factor in making business or financial decisions, and allows you to calculate your accounts and compile financial statements. Firms that are strictly operating in the United States and some other countries generally draw up these financial statements in accordance with the United States GAAP. The rest of the world, however, operates under the International Financial Reporting Standards (IFRS). The major difference between the US GAAP and IFRS is that these accounting rules are contradictory. The US GAAP philosophy is often based on rules. Companies usually group transactions based on numerical cuts. However, IFRS reflects the principles of its philosophy. "Supporters of the approach are that companies need to look at the nature of a transaction, not arbitrary boundaries." (Freedman) IFRS focuses on quality guidelines as clear and restrictive rules.
Financial accounting is typically used to analyze and record transactions. However, the second company performs the transaction with another country that is entering an international bookkeeping. The main difficulty that we can create here is a possible exchange of another currency. It may be forced to become a foreign currency when it is sold or paid to pay in foreign currency at the time of purchase. This prompts new problems for international accountants without having to deal with domestic accounting. Internationally operative accountants may have to deal with exchange rate fluctuations in transactions, foreign currency amounts need to be converted to dollars and foreign financial statements from subsidiaries need to be converted to US GAAP. Similar problems arise in financial analysis. It is almost inevitable that you never have to analyze a foreign financial statement. Most foreign accounting rules may be very different from what the accountant uses in the home. "You may be able to recompile all these financial statements using US GAAP, but there are still significant differences in the business environment to consider." (Holt) This is evidence that it is not as easy as it may seem to be a transition to the international business environment.
Other accounting features are internationally involved. In some countries, auditors have to determine whether a company complies with national law and is not similar to US GAAP. Taxpayers should be aware of tax laws that vary from one country to another and are always changing. Similar expectations can be expected in all areas of accounting such as costs and administrative accounting. Every international accountant should be aware of the different business environments, culture and GAAP differences that each country will experience where they can work together. "If you are a professional bookkeeper in the 21st century, you will become an international accountant." (Dead) No matter what kind of accounting area you can find, you never find yourself in a way to work internationally and face the many challenges.
The US adhering to IFRSs has been pushing intenet debt into the accounting world for years. Some arguments that international standards worldwide would reduce the quality of US financial statements. The argument of this adaptation is obviously the efficiency that can be brought on the international market. Investors and accountants make it much easier to compare companies from different countries. "More than a decade ago, politicians and regulators around the globe have argued that they want a common set of globally applied high-standard accounting standards." (Norris) The convergence process has been trying to achieve this goal for years. Unfortunately, many areas could not reach an agreement. Despite the philosophical differences between US GAAP and IFRS, they continue to work on convergence processes in a bid to make the international accounting system more difficult than it needs.
Freedman, John. "Differences in accounting principles in the United States and other countries." Small business. Web. April 15, 2014
Holt, Paul E., PhD. "What is an international accountant?" What is an international accountant? Web. April 15, 2014
Norris, Floyd. "The Case for Global Accounting." The New York Times. The New York Times, May 10, 2012 Web. April 15, 2014
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