Amity School of Business BBA (All Programs), I Semester Business Accountancy Ms. Geetika Batra

Amity School of Business

1

Amity School of BusinessBBA (All Programs), I Semester

Business Accountancy

Ms. Geetika Batra


International Accountancy as a Profession

2

Amity School of BusinessConcept

• INTERNATIONAL ACCOUNTING is the international aspects of accounting, including such matters as accounting principles and reporting practices in different countries and their classification; patterns of accounting development; international and regional harmonization, foreign currency translation; foreign exchange risk; international comparisons of consolidation accounting and inflation accounting; accounting in developing countries; accounting in communist countries; performance evaluation of foreign subsidiaries.

3


WHAT MAKES A ACCOUNTING A PROFESSION

Essential Features (Bayles) Extensive training Provision of important services to society Training and skills largely intellectual in character

Typical Features Generally licensed or certified Represented by organisations, associations, or institutes Autonomy

Foundation of Ethical Values (Behrman) Significantly delineated by and founded on ethical considerations rather than techniques or tools


FEATURES, DUTIES, RIGHTS, AND VALUES OF THE ACCOUNTING PROFESSION

Features

Provision of important fiduciary services to society Extensive knowledge and skill are required Training and skills required are largely intellectual in character Overseen by self-regulating membership organisations Accountable to governmental authority

Duties essential to a fiduciary relationship

Continuing attention to the needs of clients and other stakeholders Development and maintenance of required knowledge and skills Maintenance of the trust inherent in a fiduciary relationship by behaviour exhibiting responsible values Maintenance of an acceptable personal reputation Maintenance of a credible reputation as a profession

Rights permitted in most jurisdictions

Ability to hold oneself out as a designated professional to render important fiduciary services Ability to set entrance standards and examine candidates Self-regulation and discipline based on codes of conduct Participation in the development of accounting and audit practice Access to some or all fields of accounting and audit endeavour

Values necessary to discharge duties and maintain rights

Honesty Integrity Objectivity, based on independent judgement Desire to exercise due care Competence Confidentiality Commitment to place the needs of the public, the client, the profession, and the employer or firm before the professional's own self-interest


MOTIVES INFLUENCING PEOPLE AT KOHLBERG’S SIX STAGES OF MORAL REASONING

STAGE DESCRIPTION MOTIVE FOR DOING RIGHT

Preconventional Self-interest

1. Obedience Fear of punishment and authorities

2. Egotism–instrumental and social exchange

Self-gratification, concern only for oneself “Let’s make a deal”

Conventional Conformity

3. Interpersonal concordance

Role expectation or approval from others

4. Law and duty (social order)

Adherence to moral codes, or to codes of law and order

Post-conventional, Autonomous or Principled Interests of Others

5. General individual rights and standards agreed upon by society

Concern for others, and broader social welfare

6. Self-chosen principles Concern for moral or ethical principle


NATIONAL AND INTERNATIONAL ACCOUNTINGORGANISATIONS OPERATING IN NORTH AMERICA

NAME DESIGNATION

PRIME MANDATE(S)

LOCATION

American Institute of Certified Public Accountants (AICPA)

CPA Auditing, management accounting

United States, some Canadian provinces

Institute of Management Accountants (IMA)

CMA Management accounting

United States

Canadian Institute of Chartered Accountants (CICA)

CA Auditing, management accounting

Canada

Society of Management Accountants of Canada (SMAC)

CMA Management accounting

Canada

Certified General Accountants Association of Canada (CGAAC)

CGA Management accounting, auditing

Canada, some provinces


FUNDAMENTAL PRINCIPLES IN CODES OF CONDUCTFOR PROFESSIONAL ACCOUNTANTS

Members should: at all times maintain the good reputation of the profession and its ability to serve the public interest, perform with:

integrity due care professional competence independence objectivity confidentiality, and

not be associated with any misleading information or misrepresentation.


CODE OF ETHICS VALUES FRAMEWORK

Duty to Society, Serve the Public Interest

ObjectivesMeet Expectations for Professionalism,

Performance, Public Interest

Basic NeedsCredibility, Professionalism, Highest Quality

Services, Confidence

Fundamental PrinciplesIntegrity, Objectivity, Professional Competence and Due Care,

Confidentiality, Professional Behavior, Technical Standards


ASSURING INDEPENDENCE OF MIND AND APPEARANCE

Identify and EvaluateCircumstances and

Relationshipsthat Create

Threats To Independence

Self-InterestSelf-reviewAdvocacyFamiliarity

Intimidation

Eliminate ThreatsOr reduce to an

Acceptable Levelby

Applying Safeguards

ProfessionLegislationRegulation

Within ClientWithin Firm


CONFLICTS OF INTEREST FOR PROFESSIONAL ACCOUNTANTS: CATEGORIES, SPHERES OF ACTIVITY AFFECTED AND EXAMPLES

STAKEHOLDER CATEGORY

SPHERE OF ACTIVITY AFFECTED EXAMPLES

Self vs. others Services offered

Improper use of influence

Misuse of information

Conflicting services, shaving quality

Improper purchases of client goods

Improper investments by relatives

Self & others vs. others

Services offered Over-involvement with management or Directors erodes objectivity

Client vs. client Employer vs. employer

Services offered Serving competing clients at the same time

Stakeholder vs. stakeholder

Misuse of information(confidentiality)

Whistle-blowing, reporting to government or regulators


Positioning the Indian Chartered Accountancy &

Auditing Profession Globally


Establishing contact points/liaison offices in major cities worldwide and opening up of ICAI offices in countries with sizeable presence of members of ICAI. Raising profile of ICAI and Indian accounting profession in international forums of accountancy and related organizations. Popularizing Indian CA qualification in countries of interest to Indian accounting profession through an aggressive strategy – by enhancing publicity in the foreign magazine

Representation on Technical Committees of Foreign Accountancy Bodies abroad and vice- versa.

Providing link of ICAI website on the website of foreign accounting bodies.


Capacity Building of the

Profession


Organizing events/ symposium with International Standard Setters and Program Organizing unit so as to carry forward the task of preparing members for International Standards at the grass root level.

Initiating steps for recognition of Indian qualification in foreign countries through Mutual Recognition Agreement.

Participating in the projects of the Multilateral Agencies and involving participation of members.

Studying the best practices globally to align the ICAI education as per the emerging imperatives .

Promoting students exchange programme and staff exchange programmes

Facilitating Member exchange programme


Technical Cooperation to

Developing and least Developed Countries


Continue to provide technical support to accounting bodies in SAARC Region.

Assuming a mentorship role through IFAC/CAPA/SAFA, or otherwise, in development of accounting profession in underdeveloped/developing nations, and promoting compliance in standards of accounting and auditing in those countries.

Providing technical and administrative help in institutionalization of accountancy profession in under developed and developing economies.

Providing capsule courses to accountants on IFRS, Accounting, Government Accounting, Public Sector Accounting from developing and under developed economies.

*CAPA: Confederation of Asian and Pacific AccountantsSAARC: South Asian Association for Regional CooperationSAFA: South Asian Federation of AccountantsIFAC: International Federation of Accountants


Representation before Government

accruing of International

Developments


Liaising with regulators and other organizations for recognition of ICAI qualification

Utilizing resources of Indian Embassy abroad as brand ambassadors for promotion of Indian accountancy profession abroad.


Professional Opportunities Abroad


Strengthening interface between the Institute and the members abroad in order to provide more and better services to them and take their inputs for external reach of the Indian accounting profession.

Pursuing best endeavour approach for MRAs keeping in view mutuality of interest and following a just and reasonable approach.

Appointment of Consultants abroad to explore professional opportunities abroad for members in India.

Sharing information about availability of professional opportunities abroad through website of ICAI.


Why do we need IFRSs and financial reporting comparability?

Expanding world trade Proliferation of multinational corporations Increasing role of global capital markets Increased foreign direct investment Growth of multinational political organizations A way to minimize costs


Why Does GAAP Differ Among Countries?

Political/Legal System Sources of Capital Inflation Taxation Culture Accidents of History Business Complexity

Stop & Reflect: Is there one GAAP that works best everywhere?


Key Problems that Cause Resistance to IFRSs

Agreeing on who will create the rules

How different the rules will be from current national GAAP

Costs of changing GAAPs


Differences of Indian GAAP and IFRS

Differences with respect to:

• Conceptual Accounting Framework• Content of Financial Statement• Accounting Differences

Amity School of BusinessAccounting framework

Historical cost

IFRS: Historical cost, but intangible assets, property plant and equipment

(PPE) and investment property may be revalued. Derivatives, biological assets and most securities must be revalued.

Indian GAAP:Historical cost, but fixed assets, other than intangibles, may be revalued.

Amity School of BusinessFinancial statements

Contents of financial statements

IFRS: Two years’ balance sheets, income statements, cash-flow

statements, changes in equity, accounting policies and notes.

Indian GAAP: Two years’ balance sheets, profit and loss accounts,

accounting policies and notes. Listed entities are required to give their consolidated financial statements and the related notes along with the standalone financial statements. (Financial Statements should also include cash flow statements in certain cases)

Documents

Amity School of Business BBA (All Programs), I Semester Business Accountancy Ms. Geetika Batra