Kế toán, kiểm toán - Chapter 15: Global business and accounting

Global Business and AccountingChapter 15GlobalizationOccurs as managers become aware of and engage in cross-border trade and operations. A high level of globalization is a multinational enterprise that begins with raw material extraction and ends with final product assembly and sales in multiple foreign locations.GlobalizationLocation of the World’s Largest Multinationals in 2009 Country/BlockNumber of CompaniesPercentageEuropean Union 16333%United States 14028%Japan 6814%China 377%Switzerland 153%Canada 143%South Korea 143%Central/South America 112%Australia 92%Russia 81%India 71%Others143%Source: Adapted from “The Fortune Global 500,” GlobalizationGlobalization typically progresses through a series of stages that include:ExportingInternational licensingInternational joint venturesWholly owned international subsidiariesGlobal sourcing.Environmental ForcesShaping GlobalizationPolitical and Legal Systems Threat of government control or seizure of assets. Differing taxes, tariffs and licensing fees. Restrictions on foreign ownership percentage. Restrictions on currency flows. Trade agreements specifying raw material sources and labor content. Duty-free foreign trade zones. Tax incentives encouraging or discouraging stock ownership. Policies affecting individual savings. Policies impacting educational level of citizens.Economic SystemsPlanned EconomyGovernment owns factors of productionMarket EconomyPeople owns factors of productionCultureTechnology and InfrastructureDifficulty transferring knowledge and informationDifferences in educational and training levelsDifferences in internal accounting systemsPoor access to communication equipmentUnreliable utilitiesInadequate transportation systemsLack of specialized equipmentHarmonization of Financial Reporting StandardsThe International Accounting Standards Board (IASB) has as one of its stated goals the harmonization of accounting standards. Harmonization is used to describe the standardization of accounting methods and principles used in different countries throughout the world.International Financial Reporting Standards: Adoption or ConvergenceInternational Financial Reporting Standards and BudgetingTwo approaches to implementing international financial accounting standardsAdoptionConvergenceEurope 2005Canada 2011Chili 2009Australia 2007Brazil 2010China 2007Mexico 2012Japan 2016India 2012–14USA 2014–16Foreign Currenciesand Exchange RatesAn exchange rate is the amount it costs topurchase one unit of currency with another currency.¥1,000,000 × $0.00764 = $7,640HedgingFair Value HedgeAny gain or loss is recognized currently in earnings. If the hedge is on available-for-sale securities, any gain or loss is reported in other comprehensive income on the equity section of the balance sheet.Future contracts are the right toreceive a specified quantity offoreign currency at a future date.Global SourcingDifferences in exchange rates in many different countries can create significant complexities for firms practicing global sourcing.Many companies underestimate the cost of globalizing their business operations because they are not familiar with the environmental characteristics previously discussed.€¥£Customs dutiesImport feesMulticountry tax lawsTaxtreaties In many countries around the world, bribery is part of doing business. In many countries, this officially sanctioned corruption is not viewed as wrong or unethical. However, U.S.-based businesses are prohibited from influence peddling. The IMF and World Bank instituted policies to cut off funding to countries ignoring corrupt practices.Foreign Corrupt Practices ActEnd of Chapter 15