International Accounting (task into two)

International Accounting (task into two)

1.  Identify and explain the factors that influence the development of the accounting    world

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.

Factors Affecting Development of Accounting World
There are eight factors that have significant influence in the development of accounting:

A. Sources of funding
2. The legal system
3. Taxation
4. Political and economic ties
5. Inflation
6. Level of economic development
7. Level of education
8. Culture

1. Sources of funding

In countries with strong equity markets, accounting has focused on how well management runs the company (profitability), and is designed to help investors analyze the future cash flows and related risks. Instead, the credit-based system in which the bank is the main source of funding, accounting has focused on the protection of creditors through conservative accounting measurements.

2. Legal System

The western world has two basic orientations: the legal code (civil) and common law (case). In code law countries, law is a complete group that includes the provision of accounting rules and procedures that are incorporated in national law and tend to be very complete. In contrast, common law developed on a case by case basis without any attempt to cover all cases in which a complete code.

3. Taxation

In most countries, tax rules effectively set the standard because the company should record revenue and expenses in their accounts to claim it for tax purposes. While a separate tax and financial accounting, tax rules sometimes require the application of certain accounting principles.

4. Politics and Economics Association

Political & Economic factors influence the development of international accounting because of government policy and the current economic situation in a country that can make the accounting difficult to develop.

5.Inflation

Inflation causes the distortion of historical cost accounting and affect the propensity (tendency) of a State to apply the changes to the accounts of the company.

6. Levels of Economic Development

These factors influence the types of business transactions are conducted in an economy and determine what is most important

7. Level of Education

Standard accounting practices are highly complex would be useless if misunderstood and misused. Disclosures about the risks of derivative securities will not be informative unless it is read by the competent authorities

8. Culture

Four dimensions of national culture, according to Hofstede: individualism, power distance, uncertainty avoidance, the International Accounting maskulinitas.Perkembangan should be followed by the ability of individuals who are engaged in accounting to contribute to advancing accounting. International Accounting is a liaison between states. Eight factors that influence the development of international accounting should be well understood in order to create harmony between countries that trade, in Indonesia alone international accounting developments are very rapid, as has been accompanied by the relations between other countries are getting stronger.

EFFECT OF INFLUENCE-WORLD DEVELOPMENTS ACCOUNTING

Culture and historical roots of a State is the first step to identify the factors that affect the accounting. Culture is an important element that should be considered to find out how a social system changed Karen "the influence of culture, namely:

(1) a system of norms and values ​​and

(2) group behavior in their interactions within and outside the system."

Structural elements that affect the business and cultural
tried to examine the structural elements of a strong cultural influence behavior in the organizations and institutions. There are four dimensions that were identified, namely:

A. Individualism vs. Collectivism

Individualism is the social function of the relative tendency of free and individual mean just take care of themselves and their families. In contrast, collectivism is the tendency of social functions are relatively tight in which each individual to identify themselves as a group with a loyalty that does not need to be asked. The main problem of this dimension is the degree of interdependence of individuals within a society.

2. Small vs. Large Power Distance

Power Distance is the extent to which members receive power in institutions and organizations is distributed unequally. People in Small Power Distance requires equality of power and the justification for  power. In Large Power Distance societies accept a hierarchical order in which each one has its place again without justification. Predator-dimensional problem is how a society handles inequalities among people when it happens.

3. Strong vs. Weak Uncertainly Avoidance

Uncertainly Avoidance is the degree to which community members feel uncomfortable with uncertainty and doubts. Strong Uncertainly Avoidance trying to maintain a society that is so great faith, and less tolerant of people or alternative ideas. Weak inverse for Uncertainly Avoidance. The main theme in this dimension is how a public reaction against the fact that time only goes in one direction and the future is unknown, and whether to try to control the future or let it go.

4. Masculine vs. Feminine

Masculine in a society that tends to give parameters to the family, Heroism and material successes. Instead, feminism tends to personal relationships, intolerant of weakness and quality of life. The main theme in this dimension is how the society providing social roles related to gender issues.

2. Knowing the developmental approach to accounting in a market-oriented economy

Initial classification was proposed by Mueller mid-1960s. 1a identifies four approaches to the development of accounting in western countries dengaii market-oriented economic system.

(1) Based on the macroeconomic approach

Obtained accounting practices and are designed to improve the national macroeconomic objectives. General corporate purposes and not to follow the lead of national , because business firms to coordinate their activities with  policy. Thus, for example, a national policy of employment to avoid changes  great in accounting practices that generate income leveling. Or, to encourage the development of certain industries, a state may permit rapid removal of capital expenditure on some of the industry. Accounting in Sweden developed and macroeconomic approaches.

(2) Based on microeconomic approach.

Accounting evolved from the principles of microeconomics. The focus is on individual companies that have the purpose to survive. To achieve this goal, the company must be owned  physical capital. It is equally important that the company is clearly separate capital from profits to evaluate and control the business activity.

Accounting measurements are based on replacement cost is supported as best suited to this approach.

(3) Based on an independent approach,

Derived accounting and business practices and develop an ad hoc basis, with the base slowly and consideration, ¬ trial and error, and errors. Accounting services is seen as a function of the concepts and principles in ambi1 and run business processes, taken from the branches of science such as economics. Businesses face the real world complexity and uncertainty that always happens through experience, practice, and intuition. Accounting develops the same way. For example, profit is simply the most rewarding things in practice and the disclosure in a pragmatic answer the needs of its users. Independently developed accounting in Britain and the United States.

(4) Based on a uniform approach,

Standardized accounting and is used as a tool to control by the central government administration. Variability in the measurement, disclosure, and will facilitate the presentation of the designer of government, tax authorities and even managers to use accounting information in controlling all types of businesses. In general, uniform approach is used in countries with greater government involvement in economic planning in which the accounting is used among others for measuring performance, allocating resources, collect taxes and control prices. France, with a uniform chart of national accounting, is a major supporter  uniform.

Legal system: the General Accounting Law and the Law Code.
Accounting can also be classified in accordance with the legal system of a country. This view has dominated thinking accounting for approximately 20 years ago.

(1) Accounting countries generally have the character "fair presentation," transparency and full disclosure and the separation between financial and tax accounting. Dominate the stock market financial resources and financial reporting is intended for the information needs of outside investors. Accounting standard-setting activities of the private sector tends to be the important role played by the accounting profession. Accounting for common law is often referred to as "Anglo-Saxon," "British-Arnerika," or "based on the micro." Accounting for common law originated in England and then exported to countries such as Australia, Canada, Hong Kong, India, Malaysia, Pakistan and  America.

 (2) Accounting in countries  oriented code has a legalistic, does not allow disclosure of the amount is less, and conformity between financial and tax accounting. Bank or the governments ("insiders") dominate the financial resources and financial reporting is intended to protect creditors. Accounting standard-setting activities of the public sector tends to be relatively  effect of the accounting profession. Accounting code of law is often "continental," "legalistic," or "uniform at the macro level." It's found in most Continental European countries and their former colonies in Africa, Asia, and America.
Provision of accounting parallels the character referred to as model " holder" and "interested parties" (or corporate governance in state common law and the legal code).

A country's legal system and financial system can be linked in a relationship because A legal system in common law emphasizes the rights of shareholders and offers stronger protection
Law protects an investor outside the law is enforced.

The result is a strong market  developed in common law countries and weak capital markets in developing countries the legal code. Companies in the state law  obtain large amounts of capital in a public offering of shares to  investors, compared with firms in countries  code. Because the investor has a reasonable position on the company, there is a demand for accounting information that reflects the operating performance and financial position accurately. Public disclosure of information to solve the problem of balance (asymmetrical) between companies and investors.

3. Identifying the dominant state in the development of accounting practice

Some countries are dominant on the development of accounting include:
(1) France
(2) Japan
(3) United States

In the progress the countries France and Japan are less dominant than the United States. It can be seen from the development of Japanese accounting in its development is currently based on existing IFRS.

4. Have basic knowledge of accounting and be able to compare classification (international accounting local) explanation

Classification of the International Accounting basis of international accounting classification can be done in two ways, namely:

(1) deductive approach

Which identifies the relevant environmental factors and linking it with national accounting practices, an international grouping or pattern of development proposed.

(2) Inductive Approach

Accounting practices were analyzed individually, the pattern of development or grouping identified and at the end of the explanation is made from the standpoint of economic, social, political and other factors.

International accounting classification can be done in two ways: By considerations and empirically.

DIFFERENT INTERNATIONAL ACCOUNTING ACCOUNTING WITH OTHER

           In the sense, the international accounting is accounting for international transactions, accounting comparisons between different countries 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.Accounting plays a crucial role in society. The purpose of accounting is to provide information that can be used by decision-making to make economic decisions.
       
          In the corporate world of accounting is an information tool, which provide accurate accounting for decision making. Intenasional accounting has a role similar to the larger context, where the scope of reporting is for multinational companies with cross-border transactions and operations of the State or companies with reporting obligations to users in other countries report.The process was no different accounting and reporting standards specific to the qualifications set out internationally and locally in certain countries.
But the important thing to know about the international dimension of accounting processes in different countries. Where the difference is included, the difference budayam business practices, political structures, legal systems, currencies, local inflation rate, business risk, as well as rules and regulations affect how multinational companies conduct their operations and deliver its financial statements.

There are some things that the international accounting different from the others, the study of international accounting differences are in:
A. Reporting for MNC / MNE (Multi National Corporation)
2. Border
3. Reporting to the other parties in different countries
4. International Taxation
5. International Transactions

5. Explaining the difference was fair presentation and compliance with state law and where the dominant application

Differences fair presentation and compliance with law through many permasahan. This concerns the adjustments made to the application of IFRS as the basis for the presentation.

Some problems include:

1.  Depreciation, where the load is determined based on the reduction in the usefulness of an asset during times of economic benefits.

2.  Lease which is substantially the purchase of fixed assets (property) treated as such (fair presentation) or treated as operating leases are common (legal compliance).

3.  Accrued pension cost at the time generated by the employee (fair presentation) paid or charged on the basis of the time you stop working (legal compliance).

6. Knowing the important issue is the fair presentation and compliance with laws

Important issues that occur when it is about the application of IFRS basis presentation. So that the countries that have not made adjustments to the fair presentation put through his report.

• The difference between fair presentation and conformity of law pose a major influence

The difference between fair presentation and conformity of law pose a major influence on many accounting issues. Accounting for common law oriented to the needs of decision-making by outside investors. Compliance with accounting laws are designed to comply with government imposed such as the calculation of taxable income or comply with the national government's economic plan. After 2005, all listed shares of European companies will use fair presentation of accounting in consolidated statements because they will be using IFRS.