Professional Documents
Culture Documents
and business
International Financial
Management
Introduce myself:
Birth Place
Education
Work
Experience
Hobby
faculty of economics accounting
and business
Learning Objectives
1. Provide evidence of the diversity that exists in
accounting internationally.
2. Describe the major environmental factors that influence
national accounting systems and lead to accounting
diversity.
3. Explain the problems caused by accounting diversity.
faculty of economics accounting
and business
Terminology differences
› Example: UK/US comparative accounting terms
UK terms US terms
Trade Debtors Accounts receivable
Stocks Inventories
Creditors Liabilities
Shareholders funds Stockholders equity
Ordinary shares Common stock
Share premium account Additional paid-in capital
Profit and loss account Retained earnings
Turnover Sales or Revenue
faculty of economics accounting
and business
› Test:
› Use the Vodafone Financial Statement 2017 to
discover terminology differences compared
with U.S. financial statements.
U.S.: One Item (SGA)
faculty of economics accounting
and business
Verizon: 2016
SGA
U.S.: One Item (SGA)
faculty of economics accounting
and business
1. Legal system
› CODE LAW-(continental, civil, legalistic, macro-uniform)
Accounting in code law countries is legislated; therefore, accounting
professions have little influence over the rules.
Accounting rules tend to be general, opaque with low disclosure.
2. Taxation
3. Providers of financing
Debt versus Equity
4. Inflation
faculty of economics accounting
and business
4. Inflation
› Double or Triple inflation render
historical cost accounting useless
› Countries use adjusting accounting
records to correct the distorted
accounting numbers in financial
statements
› Without any adjustments, during
inflation periods, in countries where
accounting serves for taxation,
companies will be paying taxes on
fictitious profits.
faculty of economics accounting
and business
Part 2:
Analysis of Foreign Financial Statements (p.46-94)
Learning Objectives
1. Discuss reasons to analyse financial statements of
foreign companies
2. Describe potential problems in understanding foreign
financial statements
3. Provide possible solutions to problems associated with
analysing foreign financial statements
faculty of economics accounting
and business
How do we
compare
apples with oranges ?
faculty of economics accounting
and business
› https://www.investopedia.com/terms/i/ifrs.asp
faculty of economics accounting
and business
Why IFRSs?
›Management approach
management uses the information internally for
control purposes
not influenced by tax regulations
Next week
Additional Financial Reporting Issues (Part 3)
faculty of economics accounting
and business
Thank you!