International Accounting part 2

The Development and Classification of International Accounting

International Accounting is accounting for international transactions, the comparison between different accounting principles and the harmonization of the various accounting standards in the field of tax authority, auditing and accounting. Accounting should develop in order to be able to provide the necessary information in decision making in the company on any changes to the business environment.
In Accounting there are some of the characteristics of the era of the International global economy, here they are :
1. international business
2. loss of limitations between countries of the global economic era is often difficult to identify the country of origin of a product or company, this happened on multinational corporations
3. reliance on international trade

Factors that Influence the Development of International Accounting

Accounting standards and practices in each country is the result ofcomplex interactions between economic, historical, institutional and cultural. Can be expected that there would be differences between countries. Factors that influence the development of national accounting can also help explain differences in accounting between nations.
We believe that the following 8 factors that influence seignifican in the development of accounting. Seven main factors of economic, social history, and / or institutional and be an factor that is often mentioned by the authors of accounting. Lately, the relationship between culture (following eight factors) and accounting developments began explored further.

1. Funding system
In countries with strong equity markets, such as the United States and Britain, accounting has the focus or how well the management run the company (profitability) and is designed to help investors analyze the cash flows associated risk depandan. Disclosures made very complete to comply with broad public ownership. In contrast, in credit-based system in which the bank is the main source of funding, accounting has focused on creditor protection through the accounting measurement is conservative in minimizing the payment of dividends and maintain sufficient funding within the framework of protection for borrowers. Because financial institutions have direct access to what information you want, extensive public disclosure deemed unnecessary. Examples are Japan and Switzerland.

2. The legal system
The legal system determines how individuals and institutions interact. The West has two basic orientations: codification of law(civil) and common law (case). The main legal codification is taken from Roman law dank Napoleonic ode. In countries that adopts a Latin-Roman legal codification, the law is a complete group that includes provisions and procedures. Codification of accounting standards and procedures are reasonable and appropriate there. Thus, in countries that adhere to codified law, accounting rules are incorporated in national law and tend to be very comprehensive and includes many procedures. In contrast, common law developed on the basis of case by case basis without any attemptto cover all cases in the complete code. Of course, there are basic laws, but tend not to be too detailed and more flexible when compared with the general codification system.This encourages efforts to try and enable the implementation considerations.

3. Taxation
In most countries, tax rules effectively set of accounting standards because the company should record revenue and expenses in their accounts to claim the tax purposes. In other words, financial and tax accounting tax is the same. In this case, as an example is the casein Germany and Sweden. In other countries like the Netherlands, different financial accounting and tax: taxable income is essentially a financial accounting profit adjusted for differences in tax law. Of course, when separate financial and tax accounting, tax rules sometimes require the application of certain accounting principles.Valuation of inventories according to First Go Last Exit (the last-in,first-out-LIFO) in the United States is an example.

4. Political and Economic Institute
Ideas and accounting technology transferred through conquest, trade and similar strength. The recording system in pairs(double-entry) that originated in Italy in the 1400s gradually become widespread in Europe in conjunction with reform ideas(rannaissance) others. British colonialism exporting accountants and accounting concepts throughout British dominions. German occupation during World War II led to the French Plan Comptableapply. United States forced the U.S. style accounting regulatory regime in Japan after the end of World War II. Many developing countries use an accounting system that was developed else where, either because imposed upon these countries (likeIndia) or because of their own choice (such as Eastern European countries are now imitating the accounting system according to the rules of the European Union (EU).

5. Inflation
Inflation obscures the historical cost accounting through excessive reduction of asset values and related expenses, while on the other hand increased its excess of revenue. Countries with high inflation often require companies to do a variety of price changes into their financial calculations. Mexico and several South American countries using accounting generic level because of their experience with hyperinflation. In the late 1970s, in connection with an inflation rate that is not usually high, the U.S. and Britain are experimenting with reporting the effect of price changes.

6. The level of economic development
These factors influence the types of business transactions carried out in an economy and determine what the most important. In turn, this type of transaction determines the accounting issues faced. For example, stock-based compensation for corporate executivesor securitization of assets is something that rarely happens in economies with less developed capital market. Currently, many industrial economy became service economy. Accounting issues such as valuation and recording of depreciation of fixed assets arehighly relevant in the manufacturing sector became increasingly less important. The challenges of new accounting, such as valuation of intangible assets and human resources is growing.

7. Level of education
Accounting standards and practices that are very complicated (sophisticated) would be useless if misunderstood and misused.As an example of a complex technical report on the variant behavior of the cost will not mean anything, unless the reader understand the accounting charge. Disclosures about derivative securities risk will not be informative unless it is read by the competent authorities. Professional accounting education is difficult to achieve if the standard of education in a country in general was low. Mexico is one example of the State in which these issues have been successfully tackled. In other situations, a State must import power training or send their citizens to another State to obtain a proper qualification. The last thing is what is currently being implemented by the Chinese.
Some of the first seven variables are closely related. For example, the common law system originated in England and then exported to countries such as Australia, Canada, and the United States. These four countries all have highly developed capital market, which dominates the orientation of financial reporting in these countries. Financial and tax accounting are separate. In contrast, most Continental European countries and Japan have a system of codification of law and rely on banks or the government to obtain the most funding. Accounting rules there are generally in accordance with tax law.
It is difficult to determine which are the cause and which effect.Type of legal system may first affect the financial system in a State. Common law systems emphasize the rights of shareh olders andoffer better investor protection than the codification of law. The result is a strong equity markets in developing countries the lawand weak equity markets in developing countries that adopt legal codification. Taxation is an important accounting functions in each State which impose corporate income tax. Are tax accounting orientation dominates depends on whether the accounting has the purpose of competition, namely providing information to outside share holders. (Accounting for Taxes not suitable for this purpose).thus, if the common law produces a strong equity markets, taxation will not dominate. There will be two types of accounting rules: onefor tax and the other for financial reporting. Tax rules will dominatein countries that adhere to codified law or based on credit, whichfor tax accounting and financial reporting will be the same.

8. Culture
Here, culture means the values and behaviors shared by a society. Cultural variables underlying institutional arrangements in a country (such as legal systems). Underlying Hofstede’s four dimensions of national culture (social value):
(1) individualism,
(2) power distance,
(3) uncertainty avoidance, and
(4) masculinity.
The analysis is done based on data derived from the employees of a large multinational company from the United States operating in 40 different countries.
In short, individualism is the tendency towards a social order composed of loosely arranged compared to the order of strict and interdependent. Power distance is the extent to which hierarchy and division of power within an institution and organization unfairly acceptable. Uncertainty avoidance is the extent to which people do not feel comfortable with ambiguity and an uncertain future. Masculinity is the extent to which gender roles are distinguished as well as performance and achievement that can be seen (the values of the traditional masculine) is emphasized rather than the relationship and attention.

Four approaches to the development of accounting in Western countries with market-oriented economic system:
1) Based on the macroeconomic approach
Under this approach, obtained from the accounting practices and are designed to improve the national macroeconomic objectives. An example of Sweden.
2) Based on microeconomic approach
In this approach, accounting evolved from the principles of microeconomics. An example of the Netherlands.
3) Based on an independent approach
Under this approach, derived from accounting and business practices developed on an ad hoc, on the basis of considerations slowly, to try and error. For example the United Kingdom and the United States.
4) Based on a uniform approach
In this approach, standardized accounting and is used as a tool for administrative control by the central government. An example is the French state.

Identify Country Dominant In The Development of Accounting PracticesØ
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.

Knowledge of Basic Accounting Classification

Classification of the International Accounting basis of international accounting classification can be done in two ways, namely:
(1) a deductive approach
Which identifies the relevant environmental factors and correlates with the national accounting practices, an international group or pattern of the proposed development.
(2) Inductive Approach
Accounting practices were analyzed individually, the pattern of development or grouping identified and at the end of this description is made from the standpoint of economic factors, social, political and other.
International accounting classification can be done in two ways: With consideration and empirically Classification of the International Accounting

Classification of the International Accounting
International accounting classification can be done in two ways: With consideration and empirically. Classification with consideration relies on intuition, knowledge and experience. Classification empirically using statistical methods to collect data that accounting principles and practices worldwide.
There are 4 (four) approach to the development of accounting:
A. Based approach to macroeconomic
obtained from the accounting practices and are designed to improve the national macroeconomic objectives.
2. Based on micro-economic approach
accounting bekembang of microeconomic principles. The goal lies in the individual companies that have the purpose to survive.
3. Based on an independent approach
derived from accounting and business practices to develop an ad hoc basis, with the base slowly and consideration, trial and error, and kesalahan.Jasa viewed as a function of accounting concepts and principles taken from the business process being run, and not from the branches of science like the economy.
4. Based on a uniform approach
accounting distandariasi and used as a tool for administrative control by the central government. Uniformity in the measurement, disclosure, and will facilitate the presentation of the designer of government managers, tax authorities, and even to use accounting information in controlling all types of businesses.
Accounting systems can also be classified by the laws of the State, namely:
A. Accounting in common law countries have a fair presentation of the character-oriented disclosure, transparency and full and the separation between financial and tax accounting. Dominate the stock market financial resources and financial reporting to outside investors inofrmasi proven. Accounting law is often referred to as the Anglo Saxon.
2. Accounting in code law countries have a legalistic-oriented characteristics, does not allow disclosure of the amount is less, and conformity between financial and tax ankuntansi. Bank or financial ksumber dominate the government and financial reporting and financial reporting are intended to protect creditors. Accounting is also called the continent. Accounting provision parallel to the character referred to as a model of shareholder and stakeholder role in corporate law and state government public kelila legal code.

Many differences in national accounting is becoming increasingly lost. There are several reasons for this
• Hundreds of companies currently listed its shares on stock exchanges outside their home country
• Some of the code law countries, particularly in Germany and Japan to shift the responsibility of forming a government accounting standards for private sector and independent professional
• The importance of the stock market as a source of funding to grow worldwide.
Padada fair presentation based classification of compliance with the law pose a major influence on accounting issues, such as:
A. depreciation, where the load is determined based on the reduction in the usefulness of an asset during the (fair presentation) economic benefits or the amount allowed for tax purposes (legal compliance),
2. rent which is substantially the purchase of fixed assets treated as such (fair presentation) or are treated as operating leases are common (legal compliance),
3. pension costs accrued at the time generated by the employee (fair presentation) or charged on the basis paid at the time to stop working (legal compliance).
Three regions are the largest stock market, North America, Asia Pacific, and Europe
A. North America
U.S. economic growth and market share without interruption to 1990 in 2000, both the NYSE and Nasdaq stock market dominate other people around the world in terms of market capitalization, trading value of domestic stocks, foreign trade value shares, the capital of the newly acquired company is registered, number of shares of domestic companies listed and the number of foreign companies that list their stocks
2. Asia
Asia is expected to be the stock market the second most important. PRC (People's Republic of China) has emerged as global economic growth and countries 'tigers' phenomenal experience and development.
Some of the Asian financial crisis shows the vulnerability and immaturity of the economy in Asia and the slow growth of capital markets in the region tersebut.Ditambah with the opinion of critics about the lack of accounting measurement, disclosure and audit standards and monitor the implementation and enforcement of these standards.
However, future growth prospects in Asia equity markets kuat.Kapitalisasi seen the market as a percentage of GDP (Gross Domestic Product-GDP) in Asia lower than in the United States and some major European markets, which suggests that equity markets can play bigger role in Asia's economy
West
3.Eropa
Europe is the second largest equity market in the world in terms of market capitalization and trading volume. Economic expansion also contributed significantly to the rapid growth in capital markets during the second half of 1990-related an.Faktor on the European continent is slowly changing the orientation of the equity has long been a hallmark of London's equity markets and North America.
EUROPEAN EQUITY MARKET
European capital markets are undergoing major changes in a short time, partly because of the globalization of world economy and greater economic integration in the European Union.
The new culture of equity in Continental Europe
The growth of equity culture in Europe is the basis for estimating sustainable growth in the European equity markets. Intense competition among European exchanges lead to the development of a culture of equity, which then become more oriented to investors to enhance the credibility and attract new advertising
Many securities regulators and stock markets in Europe have made more stringent rules and strengthening law enforcement efforts. However, fierce competition also led to the national stock exchanges and regulators to facilitate the listing rules of stock and give a special exemption for companies that issue shares.
Although during the 1990's in the government of the Continental European corporate companies have started to attract new capital and investors, but many companies including the world's largest companies, is still far behind the standards of disclosure and listing of shares in the UK and North America.
* Differences Fair Presentation and Compliance with State Laws Against the dominant
Differences in the presentation reasonably and in accordance with the law through permasahan much. It involves an adjustment 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) A lease which is substantially the purchase of fixed assets (property) treated as such (fair presentation) or are treated as operating leases are common (legal compliance).
(3) the cost of accrued pension at the time generated by the employee (fair presentation) paid or charged on the basis of the time you stop working (legal compliance).
* Important Differences Fair Presentation and Compliance Issues of Law

Important problem that occurs when it is on the application of IFRS sebagau basic presentation. So that the countries that have not made reasonable adjustments to be inserted through the presentation of the report.
* The difference between the presentation of a reasonable and lawful cause a major influence

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