INTRODUCTION OF INTERNATIONAL ACCOUNTING
PUTRI AYU PUSPA RENGGANIS
20208970
4EB11
DIFFERRENCES BETWEEN INTERNATIONAL ACCOUNTING WITH OTHER ACCOUNTING
International accounting is accounting for international transactions, the comparison between countries of different accounting principles and harmonization of accounting standards in the field of tax authorities, auditing and other accounting areas. Accounting must evolve in order to provide the information required in decision-making in the company in any business environment changes.
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 comparable properties and the harmonization of accounting is reviewed in the context of alternative investment opportunities.
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 affect accounting different 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). Journalized in the 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 the basis of increased 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 dikapitaslisasi, 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. Here, there is some flexibility in spertinya umu, the actual rate or average rate.
INTERNATIONAL ACCOUNTING FIELDS ARE DIVIDED INTO THREE BROAD
In the international accounting is divided into three broad areas, Accounting includes several extensive process include:
¨ Measurement
Can provide in-depth feedback on the probability of a company's operations and financial position of strength. The process of identifying, classifying and counting aktivtias and transactions, to provide input regarding the profitability and operating depth.
¨ Disclosure
The process by which accounting measurement is communicated to the users of financial statements and used in decision making or process of communicating to the user.
¨ Auditing
The process by which the special accounting professionals (auditors) perform attestation (testing) on reliability of measurement and communication processes.
HISTORY OF INTERNATIONAL ACCOUNTING
Initially, the Accounting begins with double-entry system (double entry bookkeeping) in Italy in the 14th century and 15. Double entry bookkeeping (double entry bookkeeping), considered the beginning of the creation of accounting. Modern accounting double entry accounting began to find and use in the business activities of multiple listing system (double entry bookkeeping) Luca Pacioli introduced by (1447).
Luca Pacioli was born in Italy in 1447, he was not an accountant but the priest who is an expert mathematician, and lecturer at several universities in Italy. Lucalah person who first published the basic principles of double accounting system in his book: the Arithmetica geometria proportioni Summa et proportionalita in the year 1494. Many historians argue that the basic principles of double accounting system is not a pure idea Luca, but he only summarizes the accounting practices that took place at the time and publish it. It is admitted by Luca (Radebaugh, 1998) "Pacioli did not claim That his ideas were original, just that he was the one WHO was Trying to organize and publish them.
He objective was to publish a popular book That Could be used by all, following the influence of the venetian businessmen rather than bankers ". Business practices with the reference method venetian Luca wrote the book has become the method adopted not only in Italy but in almost all European countries like Germany, Holland, England.
Luca introduced the 3 (three) important notes that must be done :
¨ Memorandum book, the book records of all business transaction information.
¨ Journals, where the transaction whose information has been stored in a memorandum book and then recorded in the journal.
¨ Great book, is a book that summarizes the above journals. General ledger is the center of the accounting system (Raddebaugh, 1996).
Development of accounting systems is driven by the growth of international trade in Northern Italy during the late Middle Ages and the government's desire to find ways to impose taxes on commercial transactions.
"Bookkeeping Italian style" and then move on to Germany to help day traders and groups Hanseatik Fugger. At the same time the Dutch philosopher sharpen business income to calculate periodic and French governments to implement the whole system of government in planning and accountability.
1850's double-entry bookkeeping reached the British Isles that causes the growth of public accounting and public accounting profession is organized in Scotland and England in the 1870s. UK accounting practice spread throughout North America and throughout the British Commonwealth. Besides the Dutch accounting model exported to Indonesia, among others, the French accounting system in Polynesia and Africa regions under French rule. Reporting framework of the German system is influential in Japan, Sweden, and the Russian Empire.
First half of the 20th century, as the growing strength of the U.S. economy, the complexity of accounting issues arise simultaneously. Accounting then recognized as a separate academic discipline. After World War II, the influence of Accountancy increasingly felt in the Western World.
Trend of the National Financial Sector Policy
Economic growth in 2011 Indonesia was ranked third in the G-20 after China and India. When using indicators of economic growth, the claim is not false.
Economic growth until the third quarter of 2010, which reached 5.9% is higher than this year's target of 5.8%. Moreover, the financial indicators in 2010 has set new records for Indonesia Stock Exchange recorded an increase of composite stock price index (CSPI), the highest in the world of 2575 in the early years, through 3600 in December this year.
Other financial indicators, such as foreign exchange reserves and the strengthening of the rupiah also show a tremendous increase of only about U.S. $ 51 billion to over U.S. $ 90 billion at the end of 2010. Wave of hot money has inflated reserves and encourage the strengthening of the rupiah by 19%, the highest among Asian countries.
Intervention from the developed countries and multilateral institutions to Indonesia still maintains a policy of financial sector that is very loose it will continue to occur through a variety of ways because Indonesia is becoming increasingly important. Since early 2010, many countries have to erapkan various control policies on the entry of short-term funds.
THE ROLE OF ACCOUNTING IN THE AREA OF GLOBAL
Some causes of the emergence of international accounting can be mentioned as follows:
¨ 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 various business and financial transactions that accompany such forward by Jacoby (1970) about the change of scale domestic enterprises into the international scale:
1. Developments led the company imports raw materials from abroad and export to international markets
2. Opening branches overseas sales
3. Company provides licensing or franchising
4. Ownership of overseas companies through partial ownership, joint ventures, ownership of all
5. Management with multiorganisasi
6. Companies owned by some multinational companies
¨ Overseas investments by the company, investors, governments and so on
¨ Financial fluctuations caused by changes in the international financial system that lead to the emergence of the risk of exchange rate changes that require accounting information
¨ The increasing price of natural resources and commodities as well as monopoly
¨ Increasing economic growth and aspirations of the third world
¨ 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;
- Reduce transaction cost
- liquidity problems
- The bigger the better the stock market
¨ 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 borders borderless country
¨ 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 which differ from each other, and is 32% of the total market capitalization (market capitalization) on the NYSE.
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