Accounting - International Standards - The 5Ws and 1H

As we progress towards the second decade of the twenty-first century, we inevitably

come across a rising spade of International Trade. As an offshoot, International
Accounting is also gaining its prominent position. Simply stated, International
Accounting is the international aspect of accounting encompassing accounting
principles and reporting practices in different countries, foreign currency and
exchange and the accounting of multinational companies and their subsidiaries.
A deeper analysis of International Accountancy would help us analyse who the key
players of international Accounting. Like any trade, the principal individuals involved
here are the trading countries or the transborder organizations involved and the
agreement with regard to issues of the exchange currency and trade terms which will
affect the trade. In addition to this, there can be other bodies such as the
International Accounting Standards Board (IASB) which was formed on 1 April 2001.
This Board has the responsibility for setting International Accounting Standards. The
IASB developed standards which are "International Financial Reporting Standards".
While analysing what are the nitty-gritties of International Accounting, we come
across come across the issues foreign currency exchange markets or forex, the
differences in accounting procedures, trade cultures and governmental trade
regulations.
Another factor affecting International Accounting is the where or the place factor. The
place where the trade is actually taking place can be more of an advantage to one
trading party than the other and the accruing advantages or disadvantages will be
reflected in the book of accounts.
When does the trade take place also affects the accounting procedure. This relates
to the timing of the trade and also the key aspects: delivery of the goods and
payments taking place. Based on the agreements, either of the two activities could
precede.
Every trade and accounting procedure has a reason of why it is in place. Therefore a
sound international trade taking place will have to take into account to the
differences in accounting processes of the trading nations.
How a trade takes place, the modes of payment, the exchange currency and the
phases of payment are also key factors of international trade and will be reflected in
the books of accounts of both countries. Thus, international trade and its accounting
procedure are influenced by who is involved (trading parties), what is happening
(forex), where it is taking place, when (time) it is taking place, why(reason) it is taking
place and how (process) it takes place.
Lets discuss this article today. I think, the crux of the article is understood, but it
comes from an international trade perspective and not an international accounting
perspective.