Introduction - International Accounting

1. Introduction

1.1 International accounting differences with other accounting

Before we know the international accounting differences with other accounting, I will explain the meaning of international accounting itself. According to Iqbal, Melcher and Elmallah (1997: 18) international accounting is the accounting for transactions between countries, comparisons of accounting principles in different countries and harmonization of accounting standards around the world in the field of tax authorities, auditing and other accounting areas. International accounting differences with other accounting occurs because of a number of problems from the point of financial analysis.

Here I will explain the differences in international accounting with other accounting:

• First, in an effort to assess foreign companies, there is a tendency to look at revenues and other financial data from the standpoint of their home country, and because of the danger of ignoring the effects of accounting differences. Unless significant difference was taken into account, possibly with some involvement of a restatement, it may have very serious consequences.

• Second, awareness of international differences suggest the need to become familiar with generally accepted accounting principles as a destination for foreign countries to know better income data in the context of measurement.

• Third, the issue of comparable properties and the harmonization of accounting is reviewed in the context of alternative investment opportunities.

Differences that arise due to:

1.. economic growth,

2. inflation,

3. political system,

4. education,

5. accounting profession,

6. tax laws,

7. money market, and

8. capital.

1.2 International accounting is divided into three broad area

In the international accounting is divided into three broad areas, Accounting includes several extensive process include:

a. measurement

Can provide in-depth feedback on the probability of a company's operations and financial position of strength. The process of identifying, classifying and counting aktivtias and transactions, to provide input regarding the profitability and operating depth.

b. disclosure

The process by which accounting measurement is communicated to the users of financial statements and used in decision making or process of communicating to the user.

c. auditing

The process by which the special accounting professionals (auditors) perform attestation (testing) on reliability of measurement and communication processes.

1.3 History of international accounting and trends of international financial sector policies

Initially, the accounting begins with the double-entry system (double entry bookkeeping) in Italy in the 14th century and 15. Double entry bookkeeping (double entry bookkeeping), considered the beginning of the creation of accounting. Modern accounting started in double entry accounting was found and used in business activity, namely the multiple listing system (double entry bookkeeping) Luca Pacioli introduced by (yr 1447). Luca Pacioli was born in Italy in 1447, he was not an accountant but the priest who is an expert mathematician, and lecturer at several universities in Italy. Lucalah person who first published the basic principles of double accounting system in his book entitled: "Summa Arithmetica geometria the proportioni et proportionalita" in the year 1494.

Luca introduced the 3 (three) important notes that must be done:

A. Memorandum book, the book records of all business transaction information.

B. Journals, where the transaction whose information has been stored in a memorandum book and then recorded in the journal.

C. Great book, is a book that summarizes the above journals. General ledger is the center of accounting system (Raddebaugh, 1996).

1850's double-entry bookkeeping reached the British Isles that causes the growth of public accounting and public accounting profession is organized in Scotland and England in the 1870s. UK accounting practice spread throughout North America and throughout the British Commonwealth. Besides the Dutch accounting model exported to Indonesia, among others.

First half of the 20th century, as the growing strength of the U.S. economy, the complexity of accounting issues arise simultaneously. Accounting then recognized as a separate academic discipline. After World War II, the influence of Accountancy increasingly felt in the Western World.

1.4 The role of accounting and business in global capital markets

The following is the role of accounting in the areas of business and capital markets:

1. One of the main drivers of the emergence of international accounting is the extent and magnitude of the operating range and MNC (Multi National Corporation). MNC with greater range, it will affect the international money and capital markets as well as various business transactions and financial

2. Overseas investments by the company, investors, governments and so on

3. Financial fluctuations caused by changes in the international financial system that lead to the emergence of the risk of exchange rate changes that require accounting information

4. The increasing price of natural resources and commodities as well as monopoly

5. Increasing economic growth and aspirations of the third world

6. The increasing role of capital markets. From the aspect of Global Capital Markets found a variety of important indicators that will inevitably require international accounting Several indicators are as follows:

a. Cash flow from current transactions overseas was 1.4 trillion U.S. dollars per day
b. There is a tendency of increasing the volume of capital markets
c. There is a trend of consolidation and integration of world capital markets due;

- Reduce transaction cost

- Liquidity problems

- The bigger the better the stock market

7. Vision changes in capital market, it is characterized by:

a. Use of Decimal Pricing in the exchange transaction

b. Emerging markets are interrelated or linked exchange

c. Use of Electronic Trading System in the entire capital market

d. The existence of Global Accounting Standard single global standard

e. No more borders borderless country

8. Capital Markets USA

American capital markets including the stock market is fast becoming the most global markets. In 1999 the stock market NYSE (New York Stock Exchange) there are 1200 foreign-listed companies (listed) in U.S. capital markets from 56 countries. Imagine all these companies must comply with the country accounting standards. From 56 countries have 56 accounting standards which differ from each other, and is 32% of the total market capitalization (market capitalization) on the NYSE.