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Which Parties Stand To Gain From The International Standardization Of Accounting, And Why? Critically Assess Any Arguments /Against /This Standardization."

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Financial statements are organized and offered for external users by many enterprises around the globe. Although such financial statements may appear comparable from nation to nation, there are differences which have possibly been caused by a variety of social, economic and legal conditions and by different countries having in mind the requests of different users of financial statements when setting national necessities.

As today's companies become more globally oriented and expand into multinational corporations, there is a growing need to compress financial and accounting regulations into a homogeneous unit. To achieve this homogeneity, accounting practices in the modern economic market must strive for a symbiotic relationship with globalization. Because consumer capitalism has spread to non-originating countries, and non-Americanized cultures, the practices of accounting and financial management must standardize their policies. Thus, accounting must be regarded beyond capital market settings, and the different effects that accounting has had in such sites must be examined and converge to a simpler mode.

How Accounting is Changing Globalization

Since leading companies have subsidiaries in all important market regions, globalization has changed record keeping. Globalization is operating and investing, but also financing. The home base of most global investors is the United States, and hence, one of the major sets of standards for accounting is the Generally Accepted Accounting Principles (GAAP). However, some countries cannot interpret this format, or they are following the International Financing Reporting Standards (IFRS), the second major global standard. Because accounting reports are a means of internal communication between managers and employees all over the world stage, it would follow, as a matter of sense, that the language of this reporting should be homogeneous and convergent. Accounting influences goals and performance, both in the capital market settings, and in supranational organizations. Furthermore, accounting creates social distinctions and a cross-boarder flow of more than capital. The movement of people and the mixing of cultures are also calculated in accounting practices. One is able to study how social technologies operate in contemporary societies and to examine certain relations of power in foreign sites.

Creating International Market Places

Accounting practices in the international market places are affected by distinctive flows. These flows, which impact financing principles, are: capital, product, information, polices, and people. I'm describing each of the flows that affect accounting.

Effect in the Flows of Capital

Capital flow occurs across national borders, and is associated with currency arbitrage and short-term portfolio investment in financial securities. Underlying both these activities is the accounting information that makes knowledgeable investment in foreign markets possible. Although accounting reports are not the only source of information for investors in foreign markets, the interpretability of foreign market opportunities is directly dependent on accounting information from distances. Perceptions of opportunity for investments have been shown to be directly dependent on a variety of accounting-based. An example of this principle would be the Thai economy sustaining existing levels of foreign investment. When foreign investors believed that the Thai economy would not be able to sustain existing levels of foreign investment, a currency panic in Thailand was triggered. If standardized financial information had been available for investors, the 1997 crisis may have been averted. Accounting, as social construction, has thus enabled unsustainable valuations to be generated for real estate, currency, and capital in Southeast Asia.

Effect in the Flows of Product

Flows of products, particularly those of consumer products, are often used to characterize globalization, and to stress the need for homogeneous accounting information. The positioning of accounting in trade-resolution processes can help resolve trade and import disputes between countries. Accounting has a fundamental affect on cross-border flows of products, as is evidenced in natural resource trade disagreements such as the Canada-U.S. softwood lumber dispute. At the center of this dispute is the method of calculating producer costs--a concern of both managerial and financial accounting. Because of the centrality of the notion of cost within trade-resolution procedures, accounting operates on an embedded technology to arbitrate and allocate the materials of such disputes. It is further interesting to note that accounting has a forward and downward "trickling" motion in such episodes. Accounting trickles forward in that it structures and constrains subsequent government policy-making procedures in other arenas, also acting as a precedent for other countries, in the scope of the World Trade Organization (WTO) dispute resolution mechanisms. As accounting trickles downward, it impacts the producers and employers that manufacture products, as well as the consumers who purchase such products. By this type of financial arbitration, accounting is implicated internationally in both the regulation of product flows and the standardized costing practices.

Effect in the Flow of Information

How accounting regulates and structures the flow of information is rather vague. Information transfer, more visible on the Internet, is relatively unstructured and unregulated in current accounting practices. However, accounting technologies are serving to legitimize certain sets of information and accord certain voices in the quest for global attention. One such voice, the Organization for Economic Co-operation and Development (OECD), helps international governments tackle the economic, social, and governance challenges of a globalized economy. The OECD places governments under scrutiny, and examines such performance indicators as aging and related pension issues, employment, growth, money laundering, taxation, and transportation. Secondly, the OECD's peer review process uses performance measurements both to observe and to direct government performance. Internet information, its funding largely



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