CHAPTER 1 Introduction
Historical Perspective
Contemporary Perspective
Growth and Spread of Multinational Operations
Financial Innovation
Global Competition
Cross-Border Mergers and Acquisitions
Internationalization of Capital Markets
Americas
Western Europe
Asia
Cross-Border Equity Listing and Issuance
Where Are We?
Learning Objectives
Appendix 1-1 'Changes in Financial Sector Policy in 34 Nations, 1973-1996
Appendix 1-2 Stock Exchange Web Sites
Appendix 1-3 Financial Statements and Selected Notes from the Annual Report of INFOSYS
CHAPTER 2 Development and Classification
Development
Classification
Four Approaches to Accounting Development
Legal Systems: Common Law vs. Code Law Accounting
Practice Systems: Fair Presentation vs. Legal Compliance Accounting
CHAPTER 3 Comparative Accounting: Europe
Some Observations about Accounting Standards and Practice
IFRS in the European Union
Five National Financial Accounting Systems
France
Germany
Czech Republic
The Netherlands
United Kingdom
CHAPTER 4 Comparative Accounting: The Americas and Asia
Five National Financial Accounting Systems
United States
Mexico
Japan
China
India
CHAPTER 5 Reporting and Disclosure
Development of Disclosure
Voluntary Disclosure
Regulatory Disclosure Requirements
The US. SEC Financial Reporting Debate
Reporting and Disclosure Practices
Disclosures of Forward-Looking Information
Segment Disclosures
Social Responsibility Reporting
Special Disclosures for Nondomestic Financial Statement Users and Accounting
Principles Used
Corporate Governance Disclosures
lnternet Business Reporting and Disclosure
Annual Report Disclosures in Emerging-Market Countries
Implications for Financial Statement Users and Managers
CHAPTER 6 Foreign Currency Translation
Results of Operations
Reasons for Translation
BackgrOund and Terminology
The Problem
Financial Statement Effects of Alternative Translation Rates
Foreign Currency Transactions
Single- Transaction Perspective
Two- Transaction Perspective
Foreign Currency Translation
Multiple-Rate Methods
Financial Statement Effects
Which Is Best?
Appropriate Current Rate
Translation Gains and Losses
Where Are We?
Translation Accounting Development
Pre-1965
1965-1975
1975-1981
1981-Present
Features of Standard No. 52/International Accounting Standard 21
Translation When Local Currency Is the Functional Currency
Translation When the Parent Currency Is the Functional Currency
Translation When Foreign Currency Is the Functional Currency
Measurement Issues
Reporting Perspective
What Happened to Historical Cost?
Concept of lncome
Managed Earnings
Foreign Currency Translation and Inflation
Foreign Currency Translation Elsewhere
Appendix 6-1 Translation and Remeasurement Under FAS No. 52
CHAPTER 7 Financial Reporting and Changing Prices
Changing Prices Defined
Why Are Financial Statements Potentially Misleading During Periods of
Changing Prices?
Types of Inflation Adjustments
General Price-Level Adjustments
Price Indexes
Current-Cost Adjustments
General Price-Level Adjusted Current Costs
National Perspectives On Inflation Accounting
United States
United Kingdom
Brazil
International Accounting Standards Board
Inflation Issues
Inflation Gains and Losses
Holding Gains and Losses
Foreign Inflation 178
Avoiding the Double-Dip
Appendix 7-1 Accounting for Foreign Inflation: A Case Analysis
CHAPTER 8 Global Accounting and Auditing Standards
A Survey of International Convergence
Advantages of International Convergence
Criticisms of International Standards
Reconciliation and Mutual Recognition
Evaluation
Some Significant Events in the History of International Accounting Standard
Setting 188
Overview of Major International Organizations Promoting Accounting Convergence
International Accounting Standards Board
1ASC's Core Standards and the IOSCO Agreement
The New IASB Structure
Recognition and Support for the IASB
US. Securities and Exchange Commission Response to IFRS
European Union (EU)
Fourth, Seventh, and Eighth Directives
Have EU Harmonization Efforts Been Successful?
The EU's New Approach and the Integration of European Financial Markets
International Organization of Securities Commissions (IOSCO)
International Federation of Accountants (IFAC)
United Nations Intergovernmental Working Group of Experts on International
Standards of Accounting and Reporting (ISAR)
Organization For Economic Cooperation and Development (OECD)
Conclusion
CHAPTER 9 International Financial Statement Analysis
Introduction
Challenges And Opportunities In Cross-Border Analysis
Business Analysis Framework
International Business Strategy Analysis
Information Availability
Recommendations'for Analysis
Accounting Analysis
Suggestions for the Analyst
International Financial Analysis
Ratio Analysis
Cash Flow Analysis
Coping Mechanisms
International Prospective Analysis
Further Issues
Information Access
Timeliness of Information
Foreign Currency Considerations
Differences in Statement Format
Language and Terminology Barriers
Financial Statement Analysis and Auditing
The Attest Function
The Audit Report
Auditing and Credibility
Coping Mechanisms
Internal Auditing
Professional Organization
Evolving Role of lnternal Auditing
Appendix 9-1 Illustration of Restatement of Japanese GAAP Financial
Statements to a U.S. GAAP Basis
Appendix 9-2 International Ratio Analysis
CHAPTER 10 Managerial Planning and Control
Business Modeling
Planning Tools
Capital Budgeting
Financial Return Perspectives
Measuring Expected Returns
Multinational Cost of Capital
Management Information Systems
Systems Issues
Information Issues
Management Information and Hyperinflation
Sales Revenue
Issues In Financial Control
Domestic Versus Multinational Control System
Strategic Costing
Performance Evaluation of Foreign Operations
Consistency
Performance Criteria
Measurement Issues and Changing Prices in Evaluation
Performance Evaluation Practices: ICI
Foreign Currency Effects
Performance Standards
Value Reporting
CHAPTER 11 Financial Risk Management
Essentials
Why Manange Financial Risks?
Role of Accounting
Identifying Market Risks
Quantify Tradeoffs
Risk Management in a World of Floating Exchange Rates
Accounting for Hedge Products
Hedge of a Recognized Asset or Liability or an Unrecognized Firm
Commitment
Hedge of a Net Investment in a Foreign Operation
Speculating in Foreign Currency
Disclosure
Financial Control
Appropriate Benchmarks
Reporting Systems
CHAPTER 12 International Taxation and Transfer Pricing
Initial Concepts
Diversity of National Tax Systems
Types of Taxes
Tax Burdens
Tax Administration Systems
Foreign Tax Incentives
Harmful Tax Competition
International Harmonization
Taxation of Foreign-Source Income and Double Taxation
Foreign Tax Credit
Limits to Tax Credits
Tax Treaties
Foreign Exchange Considerations
Tax-Planning Dimensions
Organizational Considerations
Controlled Foreign Corporations and Subpart F Income
Offshore ltolding Companies
Financing Decisions
Pooling of Tax Credits
Cost Accounting Allocations
Location and Transfer Pricing
Integrating International Tax Planning
International Transfer Pricing: Complicating Variables
Tax Considerations
Tariff Considerations
Competitive Factors
Environmental Risks
Performance Evaluation Considerations
Accounting Contributions
Transfer Pricing Methodology
Market vs. Cost vs...?
Arm's-Length Principle
Comparable Uncontrolled Price Method
Comparable Uncontrolled Transaction Method
Resale Price Method
Cost-Plus Pricing Method
Comparable Profits Method
Profit-Split Methods
Other Pricing Methods
Advance Pricing Agreements
Transfer Pricing Practices
The Future