Finance Relations in a Global Context
Economic and Financial Flows
Institutions
Balance of Payments #
Multinationals
Tax Considerations and Exchange Rates
Tax Rates #
Exchange Rates
Fundamentals of Financial Reporting #
Regulation Evolvement
Rules of Jurisdictions #
The International Accounting Standards Board (IASB)
Capital Account
Financial Account
Current Account
Registers import and export payments
Records all transfers to and from abroad.
Records inflows and covers claims or liabilities to financial assets.
Registers money incomes and transfers
The International Monetary Fund
The World Bank
Ensures stability of international exchange rates and payments #
Promote shared prosperity
Enabling transactions between countries.
End extreme poverty.
Provides customers with innovative products and free services
Financial Problems
Some organisations may have increased concentration of power
Tax avoidance
Can choose the currency for cash storage
Can choose where their expenses and profits are recorded - transfer pricing.
International: taxes and contributions by employer
Multinational corporations #
Corporate income tax
Labour tax
Social contributions
Volatile exchange rates can affect companies
Value of assets and liabilities in foreign currencies.
Operating profit.
Schemes of profit shifts
Taking advantage of lower tax rates for profit in the country of origin.
Tax reporting requirements
Country-by-country
Details of revenues, profits, taxes, assets, costs, capital, earnings, and intercompany payments.
Transfer pricing
Method of reducing tax liabilities
Financial Reporting Standards Foundation (IFRS)
Design reporting standards, ensuring company accounts are understandable and comparable across organisations globally.
Legal system influences of accounting
Tax courts
Tax measurement rules
Accounting compliance rules: Requires consistency, transparency, and easily comparable globally.