international accounting (task) - Widada, SE.,MM

Harmonization of International Accounting

"Harmonization" is a process to improve compatibility (suitability) accounting practices by setting limits how much these practices may vary. Include harmonization of accounting harmonization

a. Accounting standards related to the measurement and disclosure

b. Disclosures made by public companies relating to offers of securities and stock exchange listing

c. auditing standards

ü  Understood the difference harmonization and standardization of accounting standards applicable

      Sometimes people use the term harmonization and standardization as if both have the same meaning. However, contrary to the harmonization, standardization generally means fixing a bunch of rigid rules and narrow and possibly even the application of a single standard or rule in all situations. Standardization does not accommodate the differences between countries, and therefore more difficult to be implemented internationally. Harmonization is much more flexible and open, do not use the same approach of one size for all, but to accommodate some of the differences and have experienced great progress internationally in the years ended.
Globalization also carries the implication that the things that used to be considered an authority and responsibilities of each country are not unaffected by the international community. Similarly pelapoan financial and accounting standards.
One of the qualitative characteristics of accounting information is to be compared as it is important in the world of international trade and investment. In this case obtained full comparability broadly applicable internationally, required international accounting standards. On the other hand, the existence of certain factors in the state, making each akuntantansi need for national standards in force in that State. It can be seen in a comparison view of financial accounting standards in Indonesia and the United States face. Dala standards of financial accounting in Indonesia accounting cooperatives are not necessarily needed in the United States. Based on international accounting standards are complete and comprehensive.

      Concept which is more popular than stansarisasi to bridge a wide range of accounting standards in many countries is the concept of harmonization. Harmonization of accounting standards siartikan as to minimize the difference in accounting standards in many countries. Harmonization can also be defined as a group of countries that agree to a similar accounting standards, but it should not follow the implementation of the standards must be disclosed and recommended with mutually agreed standards.

ü  Explained the pros and cons of harmonization of international standards

Proponents say that the harmonization of international harmonization (even standardized) has many advantages. Sir Bryan Carsberg, former Secretary General of the IASC, wrote about in September 2000: Cautious approach to analyzing the desire for international harmonization shows that the costs and benefits vary from one case to another case. Those who use English as their mother may feel fortunate that English became the second language that is widely used throughout the world. Nevertheless, although it can be done, we are unable to obtain an agreement that English or other common language should be used to replace the 6,800 or so languages ​​currently in use in the world. We recognize that language is the vehicle of culture that is irreplaceable and that the removal of different cultures will lead to huge losses in the field of literary and cultural expressions lainnya.Bagaimana the harmonization of taxation and social security systems? Businesses will have considerable benefits in planning, systems and training costs, and so on from harmonization. However, this case shows us another loss harmonization.
Taxation and social security systems have a strong influence on economic efficiency. Different systems have different influences. The ability to compare how the different approaches in different countries led to the countries capable of upgrading their systems. Countries competing and competition forces them to adopt a system that efficiently sort through the operation of market forces. Approval for a system of taxation that would be like a cartel and establishment would eliminate the benefits to be derived from inter-state competition. A recent paper also supports the existence of a "global GAAP" harmonized. Some of the benefits mentioned include:

1.    Global capital markets and investment capital can move throughout the world without any fuss. High-quality financial reporting standards used consistently across the world will improve the efficiency of capital allocation.

2.    Investors can make better investment decisions; portfolio will be more diversified and reduced financial risk

3.    Companies can improve the process of decision-making strategies in the areas of mergers and acquisitions

4.    The best ideas arise from a standard manufacturing activity can be deployed in developing global standards of the highest quality.

5.    Joint Reconciliation and Recognition (Reciprocity) Accounting Standards Difference. Two approaches are proposed as a solution to overcome the problems associated with cross-border content of the financial statements. Reconciliation lower cost when compared with the full financial statements based on different accounting principles. However, only provide a summary, not a complete picture of the company.

Mutual recognition occurs when the regulator outside the country of origin to receive the financial statements of foreign companies that are based on the principles of the country of origin. Payoff does not increase the cross-country comparison of the financial statements and may result in "unequal playing field" which allows foreign companies to apply less stringent standards than those applied to domestic firms .. The debate on harmonization may never be fully resolved. Most companies voluntarily adopt International Financial Reporting Standards (International Financial Reporting Standards-IFRS). And there are many countries that have adopted IFRS as a whole. International accounting standards are used as a result of:

(A)  an international agreement or political;

(B)  Voluntary Compliance (or driven professionally

(C) The decision by the national accounting standards making body.

Efforts of other international standards in the field of accounting is basically done voluntarily. Standards that would be acceptable or not depends on the people who use accounting standards. Current international standards and national standards are not the same, it will not be a problem, but when the two different standards, national standards should be the first reference (have the advantage).

ü  Understood the meaning of reconciliation and mutual or reciprocal recognition of the differences in international accounting standards

Reconciliation is the process of matching financial transaction data is processed by multiple systems / subsystems that differ based on the same source document.
Provisions on reconciliation:

a. Reconciliation between the Treasury Office UAKPA held each month, no later than 7 working days after the month ends.

b. If the deadline has not reconcile then be issued a Warning Letter Submission of Financial Statements (SP2LK).

c. And if up to 5 (five) working days from the published SP2Lk satker not submit financial statements (reconstruction) months shall be given sanctions by withholding publication of the SPM SP2D UP / TUP, GU SPM and SPM-LS to the Treasurer.

d.Reconciliation results stated in the Minutes of Reconciliation (BAR).
Reconciliation is done by tracing the details of transactions in the current account, compared with the detail in the book bank. When differences were found then action is taken to correct the form of additional transactions in the book of the bank or simply known as it will correct itself pda months to come.

Reconciliation and Recognition Together

Issuance and trading in line with growing international stocks, the problems associated with the delivery of the financial statements in non-domestic areas is increasingly becoming important. Some advocates argue that international harmonization would help resolve issues related to the content of cross-border financial reporting.

Two different approaches are proposed as a possible solution is used to solve problems related to the content of cross-border financial statements:

- Reconciliation

  Through reconciliation, foreign companies can prepare financial statements using accounting standards the State of origin, but must provide a reconciliation between accounting measures are important in countries of origin and in countries where the financial statements are reported.
Reconciliation low cost when compared with the full financial statements based on different accounting principles. Nevertheless reconciliation not only provides a summary and overview of the whole company.

- Recognition of joint / mutual / reciprocity

  Mutual recognition occurs when regulators overseas origin to receive the financial statements of foreign companies that are based on the principles of the country of origin. Reciprocity does not increase the cross-country comparison of financial statements and could cause "that tisak balanced playing field" which allows foreign companies to apply less stringent standards than those applied to domestic companies.

- The Meaning of Reconciliation and Recognition Differences Along the Accounting Standards

  Two other approaches were proposed as a solution mingkin used to overcome the problems associated with cross-border content of financial statements: (1) reconciliation, and (2) recognition bersama.Melalui reconciliation, foreign companies can prepare financial statements using accounting standards the country of origin, but should provide a reconciliation between accounting measures are important in the country of origin and in countries where the financial statements are reported.
Mutual recognition occurs when the regulator outside the country of origin to receive the financial statements of foreign companies that are based on the principles of the country of origin.

ü  Identified organizations that promote harmonization and has an important role in setting international accounting standards

The debate on harmonization may never be completely resolved. Some arguments against harmonization contain some truth. However, growing evidence indicates that the goal of international harmonization of accounting, disclosure, and audit have been received so broad that leads to the trend of international harmonization will continue or even accelerate. Despite the differences, all dimensions of accounting has become teharmonisasi worldwide. Proved by a large number of companies voluntarily adopting International Financial Reporting Standards (IFRS). Many countries have adopted IFRS as a whole, using IFRS as the basis for national standards or permit the application of IFRS. International organizations and leading standards-making bodies around the world (the European Commission, the World Trade Organization, etc.) approved International Accounting Standards Board purposes. Progress in the harmonization of disclosure and auditing pretty impressive. Companies that have adopted this view of economic benefits in the accounting and disclosure standards are credible in the eyes of international community. Hermonisasi successful attempt by the international organization can show that harmonization occurs as a natural response to economic forces.
There are six organizations have proven to be a major player in the international accounting standard setting and in the promotion of international accounting harmonization:

a. International accounting standards bodies (IASB)

b. Commission of the European Union (EU)

c. International organization capital market commission (IOSCO)

d. International federation of accountants (IFAC)

e. Intergovernmental expert working group united nations on international  accounting and reporting standards (ISAR), part of the united nations conference on trade and development (UNCTAD)

f. Accounting standards working group in cooperation organizations and economic development (OECD working group)

ü  Described the new EU approach and relate it to the integration of European financial markets

EUROPEAN UNION (EU)

One of the goals the EU is to achieve the integration of European financial markets. To achieve these objectives, the EC directive has introduced the initiative and take a huge step to achieve the single market for:

a. Capital gains in the level of EU

b. Outlines the legal basis for securities and derivatives markets are integrated

c. Achieve a single set of accounting standards for companies whose shares are listed.

Commission announced that the EU needs to move precisely in order to give a clear signal that the company is trying to do the recording in the United States and other world markets will still be able to survive within the framework of EU accounting basis. EC also stressed that the EU strengthens its commitment to the international standard setting process, which offers the most efficient and fast solution to the problems faced by companies operating on an international scale.
In 2000, the EC adopted a new strategy of financial reporting. The interesting thing about this strategy is a proposed rule that all EU companies listed on a regulated market, including banks, insurance companies and SME (small and medium sized enterprises), prepare consolidated accounts in accordance with IFRS.

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Analysis financial statements the international

Financial accounting influenced by the environment in which he is used. Every nation has a history, norm, cultural, as well as political system and economic who different, which contained on tiers who diverse in economic development. The influence-this influence interact with each another and impacting on developments and applications financial accounting practices and its reporting. Companies multinational who operates in many countries can be obtain more than half the revenue them in overseas. Because differences-such differences, standards financial accounting who applied against accounting data which reported by the company-companies multinational this varied significantly between one countries with countries that another
Companies-companies prepare financial statements who are addressed directly to primary user them. In the past, most users is the resident from same country with the country companies whose issued a financial statements. However also, unification our awesome company and organization multinational such as the European Union (EU), GATT, and NAFTA has been made a financial reporting interstate / transnational become more visible commonplace. Financial reporting interstate willed its users for understand the accounting practices which applied by an enterprise, language of state in which the the enterprise is resident, and the eye money that used company for preparing its financial statements. If investor and creditors not can meperoleh financial information which can understandable about the company which operating abroad, they are not will interested to invest or lend money on the company concerned. As a a result, done attempt for align the accounting standards in between country-that country.
Analysis financial statements is an process who full consideration in the framework of helping evaluate financial position and operating results company's on the present and the past, with aim for determine estimation and predictions which most possible regarding the condition of and the performance of company's on foreseeable future. Financial statements analysis actually lot of once however on research this time the author uses analysis financial ratio because this analysis is more frequently used and more simpler.

ü  Understood the difficulties of international business strategy analysis and basic strategies for gathering information

Analysis of the difficulties of international business strategy:

a.    availability of information

Business strategy analysis difficult especially in some countries due to lack of andalnya information about macroeconomic developments. Obtain information about the industry is also difficult to do in many countries and the number and quality of information companies are very different. Availability of specific information about the company is very low in developing countries. Lately a lot of big companies which register and raise capital in foreign markets and have expanded their disclosures voluntarily switched to accounting principles which are recognized globally as the international financial reporting standards.

b.    Recommendations for analysis

Data limitations make the effort to analyze business strategies using traditional research methods become difficult to do. Often frequent trips to learn about the local business climate and bagaimanan industry and the company actually operates, particularly in emerging market countries.

ü  Explained the steps of accounting information

The analysts need to evaluate kebujakan and accounting estimates, as well as to analyze the nature and flexibility lungkup accounting firm. The manager of the company is allowed to make a lot of considerations related to accounting, because they know more about the operations and financial condition of their company. Reported earnings are often used as the basis for evaluation of the performance of their management.
Steps to doing evaluation quality of a company's accounting:
a. Identify the principal accounting policies
b. Accounting flexibility analysis
c. Evaluation of accounting strategy
d. Evaluation of the quality of disclosure
e. Indentifikasikan potential problems
f. Make adjustments for accounting distortions.

ü  Understood the effect of accounting for cross-country analysis and the difficulty in obtaining the necessary information

The analyst needs to evaluate the accounting policies and estimates, and analyze the nature and scope of a company's accounting flexibility. Effect on the measurement of quality accounting, auditing and very dramatic.

ü  Recognizing mechanism to resolve differences in accounting principles between the State

Several approaches to do that :

a.    Some analysts presenting foreign accounting resize according to a group of internationally recognized principles or in accordance with other, more general basis.

b.    Some others develop a complete understanding of the accounting practices at a particular group of countries and limit their analysis of companies located in these countries.

ü  Understood the difficulties and weaknesses in the international financial statement analysis

Many companies do not make optimal use of disclosure of corporate information via the website, either for financial information and corporate sustainability. Another finding in this study is that many companies are not able to provide information to investors, most of the information presented in the company's website about the product or service is produced as well as a lot of companies that do not update the information presented.

2.1 Internet Financial and Sustainability Reporting

     Since 1995, there have been developments of empirical research related to Internet Financial Reporting (IFR), which reflects the development of the company's disclosure forms. Some studies examine the factors that influence disclosure policy in the company's website, as research conducted by Pirchegger and Wagenhofer (1999) and Saso and Luciana (2008a). Some studies examine the nature and expansion of financial reporting at the company's website as an instrument that linking with stakeholders. Cheng, Lawrence and Coy (2000) develop an index to measure the quality of disclosure IFR at 40 large companies in New Zaeland. The results Cheng, Lawrence and Coy (2000) showed that 32 (80%) companies have websites and 70% of the samples presented financial information on the company website. And of the 32 companies that have websites showed that only 8 (25%) companies that have a value above 50%. Research related to financial reporting on the internet Indonesial by Saso and Luciana (2008), which tests the quality of information disclosure on the website of the banking industry that went public on the Stock Exchange. By using an index developed by Cheng, Lawrence and Coy (2000) and 19 samples of the banking industry, Saso and Luciana (2008a) provide evidence that the diversity of information disclosure on the website of the banking industry in Indonesia. Other findings in this study indicate that there are many websites that the banking industry to optimize the use of Internet technology as a means of disclosure of corporate information, and only displays information about banking products only. While research related to sustainability reporting on the company's website by Saso and Luciana (2008b), and provide evidence that of the 54 samples only 10 samples are presenting sustainability reporting on the main menu page, and the low quantity and quality of information delivered to the related company information corporate sustainability (sustainability reporting). Another study conducted by Luciana and Saso (2008a and 2008b), testing the quality of information disclosure in the banking industry 19 websites and 35 companies in the category of LQ-45. This study provides evidence that the banking industry has the quality of information disclosure on the website for technology components and user support is higher than the company that makes category LQ-45.

2.2 Corporate Social Responsibility

            Understanding and awareness of the business entity to maintain good relations with all stakeholders in an effort to minimize negative impacts and maximize the positive impact of the company's operational activities towards development berkelanutan is what is now understood as a CSR (Corporate Social Responsibility. Strengthening the paradigm of sustainable development and corporate social responsibility initiatives or make CSR reporting social and environmental performance of companies considered to be as important as economic performance reporting. biggest problem is that the quality of non-financial reports is not yet as good as the quality of financial reporting. Besides age adrift far (> 500 vs. 10-20 years), the gap between the two is marked by degrees of formality, the addressee, and the report interval. formalization of financial statements has been very clear, with the advent of GAAP, IFRS and reporting standards in each country. almost entirely been legally binding. Meanwhile, the non-financial reports komprehensifpun-the standard of the Global Reporting Initiative (GRI)-still voluntary. Companies that do not follow the GRI has shown remarkable range in format nonfinansialnya report. If the financial report is primarily aimed at investors and institutions that govern a country's investment in , nonfinancial report is intended for all stakeholders (including the investors). Consequently, how reporting will be very varied in accordance with the intended stakeholders. Lastly, the financial statements of financial fixed intervals which have annual and quarterly reports while nonfinancial usually setahunan report or biennial, not even fixed. Gazdar (2007) states there are four things that make the non-financial reporting is why this is very important:
First, improve the company's reputation. The more transparent companies in the aspects demanded by all stakeholders, the higher also the reputation of the company. Of course, if the reported performance is good and valid. Therefore, companies must first improve its performance seriously. Validity is also very important, because stakeholders will never forgive companies that perform public deception.
Secondly, it serves the demands of stakeholders. Stakeholders are parties who are affected by and can affect the company in achieving its goals. Of course, their lives are affected by the company are entitled to know the aspects that come into contact with their lives. They can affect the company's very necessary to get the correct information, so that their influence can be directed to the appropriate destination.
Third, help the company in making various decisions. Report good performance of course will include indicators that will help companies see the strengths and weaknesses of her. Company could be a little quieter in the aspect that the indicators show strength. On the other hand, companies need to devote greater resources to the aspects that still looks weak. Periodic memilikiLaporan company with a consistent indicator is needed here, so the ups and downs of the performance can be monitored and addressed with appropriate keputusanyang.
Fourth, making investors easily understand the company's performance. Yangsudah as disclosed above, there is a higher need of investors to be able to know the actual performance of the company. The long-term investors really want to know whether embedded capital safe or not. Companies that have a social and environmental performance has a high likelihood that it is better to continue its business, and the investors would be interested in investing in such companies.

Referens by :

·         Pusat pengembangan bahan ajar, akuntansi internasional R. Luki Karunia SE.AK.MK

·         Another blog’s about international accounting