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Finance in a global context, Economic and financial flows in a globalised…
Finance in a global context
Tax considerations and exchange rate
Transfer Pricing
Two companies same group trade
Arms-length prinicple
Aims to determine transfer pricing
Alternative
Unitary taxation and profit apportionment
Income apportioned out and taxed accordingly
Exchange rates
Fluctautions affect SME's more
Economic and financial flows in a globalised world
Balance of payments
Financial account
Financial inflows
Claims
Current account
Imports/exports
Incomes/transfers (individuals)
Capital account
Transfers of capital
Global imbalances
Imbalance in accounts can cause financial crisis
International Financial Institutions
IMF - ensure stability of IMS
World Bank - end poverty & promote shared prosperity
Multinationals
FDI - trading in other countries
Positives
provide products worldwide
Negatives
Too much control (lobyists)
Tax avoidance
Fundamentals of international financial reports
Reasons for financial reporting
Stewardship
managing economy
information for investors
taxation
IFRS
Sets standards for international financial reporting
Transparency
Efficiency
Accountability
Important to produce accurate reports