Amity School of Business
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Amity School of BusinessBBA (All Programs), I Semester
Business Accountancy
Ms. Geetika Batra
Amity School of Business
International Accountancy as a Profession
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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.
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Amity School of Business
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
Amity School of Business
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
Amity School of Business
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
Amity School of Business
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
Amity School of Business
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.
Amity School of Business
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
Amity School of Business
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
Amity School of Business
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
Amity School of Business
Positioning the Indian Chartered Accountancy &
Auditing Profession Globally
Amity School of Business
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.
Amity School of Business
Capacity Building of the
Profession
Amity School of Business
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
Amity School of Business
Technical Cooperation to
Developing and least Developed Countries
Amity School of Business
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
Amity School of Business
Representation before Government
accruing of International
Developments
Amity School of Business
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.
Amity School of Business
Professional Opportunities Abroad
Amity School of Business
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.
Amity School of Business
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
Amity School of Business
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?
Amity School of Business
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
Amity School of Business
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)