Introduction to

International Accounting

Highlights
•International Accounting-Concept
•Factors contributing to the Development of International
Accounting
•Scope of International Accounting
•Importance of International Accounting
•Difficulties in International Accounting

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 International Accounting-Concept

• International accounting may be defined as that

branch of accounting which deals with the recording
and translation of foreign transactions, preparation
and presentation of consolidated foreign financial
statements, and presentation of international
financial reporting in accordance with international
GAAP and auditing practices.

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 Factors which have contributed towards
development of international accounting

• Factors which have contributed towards

development of international accounting are:
• Expansion of world trade
• Emergence of Multi National Corporations
• Increase in international flow of capital
• Historical evolution of accounting
• Need for harmonization of accounting practices

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 Scope of International Accounting

Scope

Social and allied

Financial Management
Accounting
Accounting Accounting
Issues

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 Financial Accounting related

• Recording foreign transactions

• Foreign currency translation
• Accounting for foreign inflation
• Consolidation of foreign financial statements,
reporting and disclosure
• Segment and interim reporting

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 Management Accounting related

• Analysis of foreign financial statements

• Multinational transfer pricing
• Budgeting and performance evaluation of
foreign subsidiaries
• Management of foreign exchange risk
• International taxation

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 Social and allied Accounting Issues

• Social accounting
• Accounting for newer financial instruments
• Accounting for Mergers and acquisitions
• Global joint ventures
• Environmental and social disclosure
• Integration of ethics into accounting
curriculum
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 Importance of International Accounting

• It facilitates achieving harmonization of accounting

practices across nations.
• It helps reaching out to global investors.
• It helps taking informed decisions.
• It helps mobilizing global resources.
• It helps establishing uniformity in global financial
reporting and disclosures practices.
• It helps professionalization of accounting education
world over.
• It helps inculcating ethics and transparency into
accounting practices.
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Difficulties in International Accounting

Operational Perceptual/Policy
complexities diversities

Socio-economic,
political, cultural,
technological and
Additional Cost,
perceptual
trained manpower,
differences that
Technology
exist among
nations world
wide

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