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Finance Relations in a Global Context - Coggle Diagram
Finance Relations in a Global Context
Economic and Financial Flows
Institutions
The International Monetary Fund
Ensures stability of international exchange rates and payments
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Enabling transactions between countries.
The World Bank
Promote shared prosperity
End extreme poverty.
Balance of Payments
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Capital Account
Records all transfers to and from abroad.
Financial Account
Records inflows and covers claims or liabilities to financial assets.
Current Account
Registers import and export payments
Registers money incomes and transfers
Multinationals
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.
Tax Considerations and Exchange Rates
Tax Rates
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International: taxes and contributions by employer
Corporate income tax
Labour tax
Social contributions
Multinational corporations
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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
Exchange Rates
Volatile exchange rates can affect companies
Value of assets and liabilities in foreign currencies.
Operating profit.
Fundamentals of Financial Reporting
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Regulation Evolvement
Financial Reporting Standards Foundation (IFRS)
Design reporting standards, ensuring company accounts are understandable and comparable across organisations globally.
Rules of Jurisdictions
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Legal system influences of accounting
Tax courts
Tax measurement rules
The International Accounting Standards Board (IASB)
Accounting compliance rules: Requires consistency, transparency, and easily comparable globally.