Lecture International business (9e): Chapter 20 - Charles W.L. Hill - Trường Đại học Công nghiệp Thực phẩm Tp. Hồ Chí Minh

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International Business

9e 

By Charles W.L. Hill

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Chapter 20

<b>Accounting and Finance </b>

<b>in the International </b>

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20­3

What Is Accounting?



_{Accounting is the language of business}

_{it is the way firms communicate their financial}
positions



_{Accounting is more complex for international}

firms because of differences in accounting

standards from country to country

_{differences make it difficult for investors, creditors,}
and governments to evaluate firms



_{It is difficult to compare financial reports from}

country to country because of national

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What Determines National 

Accounting Standards?



_{Accounting standards}

_{are rules for preparing}

financial statements

 _{variables influencing accounting systems include}
 _{the relationship between business and the}

providers of capital

 _{political and economic ties}
 _{the level of inflation}

 _{the level of economic development}
 _{the prevailing culture in a country}



_{Auditing standards}

_{specify the rules for}

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20­5

Why Are International 

Accounting Standards Important?



_{The growth of transnational financing and}

transnational investment has created a need for

transnational financial reporting

_{many companies obtain capital from foreign providers}
who are demanding greater consistency



_{Standardization of accounting practices across}

national borders is probably in the best interests

of the world economy



_The

_{International Accounting Standards Board}

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How Does Accounting Influence 

Control Systems?



_{The control process in most firms is usually}

conducted annually and involves three steps

1. Subunit goals are jointly determined by the head
office and subunit management

2. The head office monitors subunit performance
throughout the year

3. The head office intervenes if the subsidiary fails to
achieve its goal, and takes corrective actions if

necessary



_{Budgets and performance data are usually}

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20­7

How Do Exchange Rates 

Influence Control?



_{The Lessard-Lorange}

_Model

-

_{firms can deal with the problems of exchange}

rates and control in three ways

1. The initial rate

 _{the spot exchange rate when the budget is adopted}

1. The projected rate

 _{the spot exchange rate forecast for the end of the}
budget picture

1. The ending rate

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