IntroductionIn today's business world, there are many companies that operate on a global scale. Every country is different and they have different rules and regulations. There are also differences with accounting criteria within each country and their businesses. Having a global business requires more consideration in accounting versus a company that just does business locally. There are many countries that do not have the same level of regulations as the United States has. Because of the global accounting differences, it is extremely important for any global organization to use the best financial practices. The team paper will compare and contrast some of the challenges that a United States company can face when dealing with a foreign company. The paper will compare and contrast the accounting reporting criteria, the regulatory environment, issues with foreign currency, and the differences in GAAP.
Regulatory EnvironmentOrganizations that operate either domestically or internationally are regulated by local and state laws, plus a host of regulatory commissions.
Public companies listed on the United States stock exchange platforms are regulated by the SEC (United States Securities and Exchange Commission) and must also comply with the standards of the Financial Accounting Board (FASB). These companies also must adhere to the standards of Generally Accepted Accounting Principles (GAAP) that standardizes the measures of financial reporting as well as the rules that govern these standards.
As its name implies, the IASB (International Accounting Standards Board) governs international standards of financial reporting around the globe. All the various regulatory bodies help to maintain consistency and accuracy in reporting because companies with a global reach might find the need to produce multiple versions of their annual financial report; therefore, they must adhere to the standards of both the United States and International governing bodies. The Sarbanes-Oxley Act of 2002, (typically referred to...