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Analysis of business strategy is an important first step in the analysis of financial statements. This analysis provides a qualitative understanding of the company and its competitors related to the economic environment. By identifying the drivers of profit and risk factor is the main business, business strategy or business analysis will help the analyst to make a realistic prediction. The difficulties of analysis of international business strategy:
a. Availability of information
Analysis of business strategy particularly difficult in some countries due to lack information about macroeconomic developments. Obtain information about the industry is also very difficult in many countries and the number and quality of information companies are very different. Availability of specific information about the company is very low in developing countries. Lately, many large companies that keep records and raise capital in foreign markets and have expanded their disclosure voluntarily switch to accounting principles that are recognized globally as an international financial reporting standards.
b. Recommendations for analysis
Data limitations make the effort to analyze the business strategy by using traditional research methods to be difficult. Often frequent trips to study the local business climate and real to how industry and company operations, particularly in emerging market countries.
c. Basic Strategy
The basic strategy adopted in order to improve data and information services include:
Ø One of the doors of data; One of data meant that the Department of Agriculture just published a range of numbers for variables, indicators and time. A door that is data and agricultural information has been agreed by the echelon I units concerned before published outside through the Center for Agricultural Data and Information. Policy of the data and carried out by one door while the concept of centralizing the collection, processing, and presentation of data implemented in a distributed system by implementing an integrated information network.
Ø Centralized concept; in order to avoid duplication and do not statistical development activities and information systems, by dividing out all activities required in accordance with the functional tasks of each unit of data and statistics in the Department of Agriculture. By applying this strategy, expected to be achieved effectiveness and efficiency of use of available resources.
Ø Internal consolidation by building infrastructure that support the execution of work, building a culture of work and service to all levels in the organization;
Ø On the external side to coordinate with partners to establish cooperation in agriculture and information systems with the goal of mutual support, and complete support.
Step Analysis Of Accounting
The purpose of accounting analysis is to analyze the extent to which the company reported results reflect the economic reality. Analysts need to evaluate policy and accounting estimates, and analyze the nature and flexibility accounting of a company. The managers of the company is allowed to make a lot of considerations related to the accounting, because they know more about the financial condition and operations of their companies. Reported earnings is often used as a basis for evaluating the performance of their management.
Step in doing evaluation accounting quality of a company:
Ø Identify the main accounting policies
Ø Analyze the flexibility of accounting
Ø Evaluate the accounting strategy
Ø Evaluate the quality of disclosure
Ø Identifications potential problems
Ø Make adjustments for accounting distortions
Effect Of Accounting Analyst Accounting Between State
Analysts need to evaluate policies and accounting estimates, and analyze the nature and scope of a company’s accounting flexibility. Effect on the measurement of quality of accounting, and auditing are very dramatic.
Difficulties In Obtaining International Accounting
In obtaining the data of International Accounting, there are several difficulties, among others:
a. Depreciation adjustment
Depreciation will affect profits, it is necessary to consider the age of the functions that must be decided manajemen.
LIFO to FIFO inventory adjustment Inventories should be converted in FIFOc method. Reserve
Reserves are the company’s ability to pay or cover expenses for removing beban.d. Reformulation of Financial Statements Adjustment of some of the changes after a few calculations on the points above TSB.
Mechanism To Resolve Differences Between Accounting Principles Of State
Several approaches can be done, namely: – Some analysts present foreign accounting resize according to a group of internationally recognized principles or according to other, more general basis. – Some others develop a complete understanding of accounting practices in a particular group of countries and limited their analysis to firms located in these countries.
Difficulties And Weakness In The International Financial Analysis
a. Information access Information on thousands of companies from around the world have been widely available in recent years. Sources of information in countless numbers up through the World Wide Web (WWW). Companies in the world today have a website and annual report are available for free of charge from various other sources.
b. Timeliness of information timeliness of financial reports, annual reports, reports to regulators vary in each country.
c. Barriers of language and terminology.
d. Foreign currency issues. e. Differences in the type and format of financial statements.
Use Of The Website Or The www (World Wide Web)
To Obtain Information Research Company Many companies do not make optimum use of disclosure of corporate information via the website, both for financial and corporate sustainability. Another finding in this study is that many companies can`t provide information for investors, most of the information presented in the company’s website is about the products or services produced and the many companies that do not update the information presented.
REPORTING AND DISCLOSURE
accounting disclosure practices are influenced by differences in corporate financial governance in a country.
Disclosure rules are very different around the world in some ways like the statement of cash flows and changes in equity, related party transactions, segment reporting, the fair value of financial assets and liabilities and earnings per share. In this section attention is focused on:
A. Disclosure of information to see the future “information look to the future” that includes:
(A) the forecast revenue, profit and loss, profit and loss per share (EPS), capital expenditures, and other financial post. (B) information regarding the performance or prospective future economic position that is not too sure when compared with the projected post, fiscal period, and the projected amount. (C) statements of management plans and objectives of future operations.
Most companies in each country presents a disclosure of information about plans and goals manjemen. Conversely fewer companies that disclose prophecy, from the lowest two companies in Japan and the highest 31 companies in the United States. Most forecasts in the U.S. and Germany regarding capital expenditure, not profits and sales.
2. Disclosure of segment
3. Cash flow statement and fund flow
4. Disclosure of social responsibility
5. Specific disclosures for users of financial statements and the non domestic use prinsipakuntansi
issues – issues that affect management’s decision to make the disclosure decision.
Decision-making (desicion making) is to assess and impose pilihan.Keputusan was taken after some calculations and considerations alternatif.Sebelum option was dropped, there are several steps that may be traversed by the decision maker. These stages may include identification of major problems, menyusn alternative will be selected and arrive at the best decision.
purpose of accounting disclosure in the equity markets.
In a competitive economy, the disclosure is a means to channel koorperasi koorperasi accountability to capital providers (investors) and to mepermudah allocation of resources to their most productive use of a koorperasi need to attract capital in a very large amount to finance the production and distribution activities are extensive. Therefore internal pembiyaan is highly dependent on external capital invested by the investor on a koorperasi, In return, an investor requires disclosure (tansparansi koorperasi) in which investors can assess the quality of their stock to cultivate.
fundamental differences in corporate financial disclosure practices in various aspects.
Disclosure rules are very different around the world in some ways like the statement of cash flows and changes in equity, related party transactions, segment reporting, the fair value of financial assets and liabilities and earnings per share. In this section attention is focused on: Disclosure of information to see the future “information look to the future” that includes: Forecast revenue, profit and loss, profit and loss per share (EPS), capital expenditures, and other financial post.
FOREIGN CURRENCY TRANSLATION
translation and conversion between currencies.
Foreign currency translation The process is repeated presentation of financial information from one currency to another currency. While foreign currency conversion between the exchange of one currency to another currency physically. The difference is, the translation is simply a change of monetary units, for example, on a balance sheet that is expressed in British pounds are presented back to the U.S. dollar equivalent value. There is no physical exchange that occurred, and no relevant transaction occurs. While the conversion, allowing the physical exchanges that occur and there is a related transaction occurring.
Understanding the terms – in terms of foreign currency translation.
Conversion, an exchange of one currency into another currency.
Exchange rate now, the exchange rate prevailing on the date of the relevant financial laporang.
Net asset position at risk, the excess assets are measured or denominated in foreign currency and in translasikan at the exchange rate of duty is now measured or denominated in foreign currencies and translated at the exchange rate now.
Exchange forward contracts, an agreement to exchange currencies of different countries by using a specific rate (forward rate) at a given date in the future.
Functional currency, is the main currency used by a company in the conduct of business activities. Usually such currency is the currency of the State where the company is located.
Historical exchange rate, the exchange value of foreign currency that is used when an asset or liability denominated in foreign currencies bought or going.
Reporting currency, the currency used in preparing the company financial statements.
Spot exchange rate, the exchange rate for currency exchange in the time immediately.
Translation adjustments, the adjustments arising from the translation of financial statements of a company’s functional currency into the reporting currency.
different advantages and disadvantages of foreign currency translation.
If the point of view of local currency to be used (local companies viewpoint), the entry of the translation adjustment in current earnings do not need to be done. Enter translation gains and losses in earnings will distort the real financial relationships and can mislead the users of such information. Translation gains or losses should be treated from the standpoint of local currency as an adjustment to equity owners. If the parent company’s reporting currency is the unit of measurement of the financial statements are translated (the parent company’s point of view), it is advisable to recognize gain or loss on translation of profit as soon as possible. Point of view of the parent company saw overseas subsidiaries as an extension of its parent company. Translation gains and losses reflect the increase or decrease in equity of foreign investment in domestic currency and should be recognized.
Calculate gains and losses of foreign currency translation.
Changes in the value of domestic currency equivalent of the net assets of foreign subsidiaries are not realized and no effect on the local currency cash flows generated from foreign entities. Translation adjustment should be accumulated separately as part of consolidated equity.
Pengangguhan and Amortization
Suspension of translation gains or losses and to amortize it over the useful adjustment items related to the balance sheet, primarily related to debt ditangguha = kandan will be amortized over the related fixed assets, which is charged against earnings in the same way with the burden of depreciation or deferred and amortized during the remainder of the loan as an adjustment to interest expense.
Translation gains and losses is to recognize the losses as soon as possible after it happens, but admitted only after the profits realized, this is simply because it is an advantage, it ignores the changes in exchange rates.
Recognize translation gains and losses in the income statement as soon as possible. However, inserting translation gains and losses in the current year’s profit will introduce a random element in the profits that may result in significant fluctuations in earnings in case of exchange rate changes. Translation gains and losses reflect the increase or decrease in equity investments in domestic currency and should be recognized.
Understanding the effect of using various methods of foreign currency translation of financial statements.
Although most of the technical issues in accounting tends to resolve itself over time, foreign currency translation terrnyata is an exception. That this trend will continue to be supported by such developments as the collapse of the dominance of the dollar, the currency rate movements are approved by the government, and the globalization of world capital markets, which have increased the importance of reporting and financial disclosure.
Understanding the relationship between the translations of foreign currency with inflation.
The use of the exchange rate is now to translate the cost of non-monetary assets are located in berinflasi environment will ultimately lead to an equivalent value in domestic currency is much lower than the initial baseline measurement. At the same time, earnings will be much larger translated with respect to load depresisasi which is also lower. The translation as it can be more easily mislead readers as to give information to the reader. Assessment of the lower dollar typically lower earnings power akutal of foreign assets which are supported by local inflation and the ratio of return on investment that affected inflation in a foreign operation may create false expectations on future profits.
FASB rejected before the inflation adjustment process of translation, because the adjustment is not inconsistent with the historical cost basis of the assessment framework used in the basic financial statements in the U.S.. As a solution FAS No. 52 requires the use of the U.S. dollar as the functional currency for those residing overseas operations with hyperinflation environment. This procedure will maintain a constant value of the dollar equivalent of foreign currency assets, because these assets will be translated according to the historical rate. The imposition of losses on fixed assets in the translation of foreign currency to equity shareholders will cause a significant effect on financial ratios. Foreign currency translation problem can not be separated from the problem of accounting for foreign inflation.
FINANCIAL REPORTING AND PRICE CHANGES
Understand why the financial report has the potential to mislead during the period of price changes.
This measurement inaccuracies distort the financial projections based on historical time series of data, the budget is the basis of performance measurement, performance data can not isolate the effect of inflation that can not be controlled. While earnings are valued more in turn will lead to: Increase the proportion of tax, demand more dividends than shareholders, salaries and demand higher wages than workers, and adverse actions of the host country (such as taxation of very large gains ).
Knowing the term – inflation accounting terms and understand the effect of price adjustments to financial statements.
To understand the notion of price changes (changing prices), the following terms in use:
A general price changes occur when the average price of all goods and services in an economy subject to change. Price increases are collectively known as inflation (inflation), while the price declines known as deflation (deflation).
Specific price changes refers to changes in the price of goods or services which are caused by changes in demand and supply. A stable price level becomes a national priority for many countries around the world. Although the price changes occur throughout the world, the influence of business and financial reporting varies from one country to another.
Determine differences in current cost accounting model and the conventional.
In general, the conventional accounting, financial statements are presented based on the historical value that assumes that hargaharga (monetary unit) is stable. Conventional accounting does not recognize the changes in general price levels or changes in the level of rates. As a consequence, if there is a change in purchasing power as inflation period, the historical financial statements is economically irrelevant. In this period generally scored higher revenues while fixed assets valued lower. Actually, there are several methods of accounting on the effect of price changes, such as accounting fixed price, current value accounting, and general price level accounting. General price level accounting restatement will hold the components of financial statements into dollars at the same level of purchasing power, but did not change the accounting principles used in accounting based on the value historis.Pada practice, the controversy concerning the relevance of the use of price level accounting public still continues to this day. Some of the arguments that support or reject the application of the general price level accounting will be presented in this article. Similarly, the results of two studies on the effects of application of the general price level accounting on the financial statements will be compared to see whether the accounting adjustments based on the general price level is required.
Explain the differences of inflation accounting in the U.S., Britain, and Brazil.
In the U.S., the advantages and disadvantages of monetary items are determined by me restate, in constant dollars, from the beginning and ending balances, or transactions in, all assets and liabilities (including long-term debt). The results are intended to provide a useful basis for assessing the performance of companies in maintaining the general purchasing power of investors (FAS No. 89, paragraphs 65-66). Gains or losses are not included in profit but are disclosed in a separate stand-alone item. This treatment implies that the FASB looked at the advantages and disadvantages in the IEM-monetary item is different in nature with other spiders.
In the UK, gains and losses on monetary items are separated into monetary working capital adjustment and geraing. The second number is associated with the following changes in the price level is given (SSAP NO. 16 paragraphs 11-13) / when sales on credit, working capital tied sebebnarnya company (in a sense, corporate finance financial changes in the replacement cost of inventory) to accounts receivable associated billed. Conversely, when stocks and other supplies purchased on credit, the specific price changes related to these items are basically financed by the supplier during the crediting period. So that the working capital of the buyers are free to use for other purposes. Because these phenomena are the same and is seen as an extension of adjusting the running costs of sales to generate operating profit has been adjusted.
In Brazil, do not adjust the current assets and current liabilities are explicitly because the amounts are expressed in the running. Adjustments arising from calculating the net value of assets and capital that have been permanently adjusted to price levels represent a gain or loss in the general purchasing power of working capital financing with debt or equity. Adjustment of permanent assets in excess of capital adjustment to reflect the portion of assets financed with debt permanently, resulting in a gain purchasing power. Instead, the adjustment of capital assets is greater than the permanent adjustment shows the portion of working capital financed by capital. For the capital portion is recognized the loss of purchasing power during inflationary periods.
Understanding of financial reporting in hyperinflation economy.
This statement does not set at a certain level of inflation is considered hyperinflation. Consideration is required in determining when restatement of financial statements need to be done in accordance with this statement. Characteristics of the economic environment of a country which is an indication that the country is experiencing hyperinflation, among others: (a) inhabitants prefer to store their wealth in the form of non-monetary assets or in a foreign currency is relatively stable. Amount of local currency held immediately invested to maintain purchasing power; (b) the population consider the monetary amount is not in the local currency but in foreign currencies are relatively stable. The prices may dikuotasikan in foreign currency; (c) the prevailing price in the sales and purchases on credit is determined by inserting a factor expected loss of purchasing power during the credit period, even if the short loan period, (d) interest rates, wages and prices associated with the price index, and (e) the cumulative inflation rate over three years approaches or exceeds 100%. All entities that prepare financial statements in the currency of the same hyper-inflation economies are encouraged to apply this statement from the same date. However, this statement is applied to the financial statements of each entity since the beginning of the reporting period when the entity identifies the existence of hyperinflation in the country whose currency is used by such entities to prepare financial statements.
Knowing whether a constant dollar or current cost is better to measure the effects of inflation.
Proponents of historical cost model of constant purchasing power of the opinion that the cost model now violates the basic framework of the historical cost because it is based on the initial acquisition cost, the model is also based on a hypothetical cost estimates and therefore too subjective and difficult to put into practice. Ignoring changes in general purchasing power of money led to comparisons between periods is also not difficult to interpret and weigh the advantages and disadvantages of the ownership of monetary items such as debt. In the present model of adjustment costs, the business is not affected by inflation umu, but more influenced by the rising costs of special operations and fixed asset expenditures. Model of constant purchasing power of combining the characteristics of the current cost model of constant purchasing power historical cost and current cost models. The basic framework of this mixture increases recognize the present value of assets as the advantages of wealth, and thus allow for comparison between present income and earnings in the previous period. Companies considered it would be better only if the asset increases greater than inflation. Monetary gains or losses, are largely ignored in current cost models, is part of the measurement.
Definition of a double dip (double dip) and explains how to handle.
In Hall’s point of view, resembles a double-dip recession is punctuated by sustained periods of growth, followed by a long decline in the economy.
INTRODUCTION1. INTERNATIONAL ACCOUNTING ACCOUNTING DIFFERENCES WITH OTHER
AccountingInternational accounting differences bring a number of problems from the standpoint of financial analysis.• 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:A. economic growth,2. inflation,3. political system,4. education,5. accounting profession,6. tax laws,7. money market, and8. capital.
In this case, Choi and Levich (1991) provides a useful framework for analyzing the impact and relevance of the differences in similarity and no resemblance to the economic environment. In an environment or a situation similar to the accounting, the accounting differences is un logisan and clues to the results that can not be compared. Logical practices suggest that the accounting treatment of similar / same. When the economic environment is not the same, but, as in the case of international investment, accounting differences can be justified, particularly where lies the lack of similarity exists in company laws, tax laws, finance, business customs, culture, accounting and so on. On the other hand, a similar accounting treatment may be justified when several factors have some significant similarities. Understanding the importance of environmental factors and cultural / cultural are all concerned.
In a survey to examine how capital market participants respond to differences in accounting, Choi and Levich cited the opinion of institutional investors, multinational companies that issued securities, the bank under the international securities, and regulatory agencies. Only 48% of all respondents interviewed were influenced by differences in international accounting, but it seems 52% of respondents who claimed not affected by differences in accounting facts “coping” a wide range offactors, including:
A. repeat their own accounts with GAAP,2. development capabilities of foreign GAAP,3. use other sources of information, and4. use a different investment approach, for example, macro-economic approach “top-down” or from top to bottom to be paired with a diversified selection of shares of state in the country.
2. INTERNATIONAL ACCOUNTING IS Divided Broad INTO THREE AREAS
In the international accounting is Divided into three broad areas, accounting includes extensive Several proceedings were, Among others:A. The measurementIt can Provide in-depth feedback regarding the probability of operation of a company’s financial position and power. The process of identifying, categorizing and calculating aktivtias and transactions, in-depth Provide feedback regarding profitability and operations.
2. DisclosureThe process by the which the measurement accounting communicated to the users of the financial statements and is used in the decision making process or Communicate it to the user.
3. AuditingThe process by the which the special accounting professional circles (the auditor) do attest (testing) with respect to the reliability of the measurement process and communication.
3. HISTORICAL PERSPECTIVE
History of the International AccountingPreliminarySome time ago, accounting for its ability to attract public attention through the accounting and human resource measurement, reporting and audit of the social responsibility of organizations. Current accounting operations including behavior in the environment, public sector and international. Accounting provides information to capital markets, large capital markets, both domestically and internationally.
According to Choi and Muller (1998: 1) that there are three major forces that drive the field of international accounting into the growing international dimension, namelyA. environmental factors,2. Internationalization of the accounting discipline, and3. Internationalization of the accounting professionThese three factors are in transit / development accounting plays an important role in determining the direction of accounting theory for bertahun-tahun/dekade many experts and devote his mind to develop a theory of accounting and was a failure and that led to the evolution of “theorizing” to ” conceptualizing “.
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.2. Journals, where the transaction whose information has been stored in a memorandum book and then recorded in the journal.3. Great book, is a book that summarizes the above journals. General ledger is the center of the 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. For many countries, accounting is a national problem with national standards and practices that become embedded in national law and professional rules.
Trend of the National Financial Sector Policy
Do not feel we have entered in 2011. Government is optimistic the economy will be better next year. Of course, the measure used is the economic growth that is predicted to reach 6.4%, continuing the achievement of 2010. Moreover, according to President Yudhoyono in his speech in East Java, Indonesia’s economic growth ranked third in the G-20 after China and India.
When using indicators of economic growth, the claim is not false.Economic growth until the third quarter of 2010, which reached 5.9% is higher than this year’s target of 5.8%. Moreover, the financial indicators in 2010 has set new records for Indonesia Stock Exchange recorded an increase of composite stock price index (CSPI), the highest in the world of 2575 in the early years, through 3600 in December this year.
Other financial indicators, such as foreign exchange reserves and the strengthening of the rupiah also show a tremendous increase of only about U.S. $ 51 billion to over U.S. $ 90 billion at the end of 2010. Wave of hot money has inflated reserves and encourage the strengthening of the rupiah by 19%, the highest among Asian countries.
“Need a change in budget politics that is not just a collection of state budget funds allocated to stimulate economic growth.However, also as a political tool to maintain the level of social welfare by making changes in priorities.
However, how much financial benefit from the achievements of the shine for the national economy? In any country the size of the economic success rather than the achievement of the financial sector. The proof, since the beginning of the year, almost all countries are busy playing in the financial sector policy whose main objective for the real sector. Like for example, developed countries and developing a continued attempt to lower their interest rates to near zero and weaken its currency to boost the real sector and reduce unemployment.
Very surprising that during the 2010 Indonesia would take a different policy direction to the trend of financial policies in the countries of the world. Rupiah strengthened precisely assessed as a strength. JCI is considered performance rebound, but there is the threat of financial bubbles. Trends in the financial sector policies are not integrated with strategy and policy on trade and industry sectors. That way, no consideration is unclear why the exchange should be strengthened or weakened. “How the financial sector policy in 2011?
Financial policy in 2010 will certainly continue and there will be no fundamental change. The government and Bank Indonesia would not make changes to the policy of flooding the global money market funds that will go to Indonesia. Loose fiscal policy tends to allow and even encourage the influx of hot money, and Indonesia will remain a haven for the world’s investment portfolio.
Intervention from the developed countries and multilateral institutions to Indonesia still maintains a policy of financial sector that is very loose it will continue to occur through a variety of ways because Indonesia is becoming increasingly important. Since early 2010, many countries have to erapkan various control policies on the entry of short-term funds.
In Thailand for example, the government has imposed a withholding tax for interest or capital gains received by foreigners. Brazil has raised taxes for foreign investors to buy domestic bonds. Meanwhile, in South Korea, the government has even banned the withdrawal of foreign currency loans and lower portion of the foreign debt.The consequences of a policy to keep interest rates and bond yields are high foreign ownership in the SUN, SBI, and the stock will continue to increase as the current trend. When in 2008 the total foreign funds amounting to Rp548 trillion only, to Rp1.374 trillion this year, in 2011 certainly will be much greater.
In fact, besides the threat of reversal of capital, the economic cost to be paid from the amount of foreign ownership is very expensive. Capital Bank Indonesia will continue to erode, the cost of private capital will be more expensive due to high lending rates and yields of bonds issued.
The changing demands
Policy changes in the financial sector is also a demand for high cost of the current financial policy must also be paid to the low economic performance of the real sector. Without policy changes in the financial sector, real sector performance in 2011 there will be no significant improvement when compared to 2010. In fact, as the last six years, in 2010 economic growth in three main sectors, namely agriculture, mining, and processing, which became the main economic activities to absorb 52% of the population and employment grew only 3.5%, far below the economic growth.Slow performance of the real sector impact on the inability to provide sufficient jobs to hamper the completion of a serious unemployment problem. Indeed, the open unemployment rate declined in 2010. However, the number of underemployed people was 32.8 million. Meanwhile, the BPS data show thatof 12.2 million jobs created, 41% of whom are business service organizations (including political organizations, service repair, cleaning, laundry, etc.), rather than on sectors that will drive productivity and high added value.Poor performance in job creation would be more difficult for eradicating poverty. Indeed, the poverty rate has dropped to 13.3% this year and 11.5% -12% target by 2011 is likely to be reached. However, the reduced number of people who are below the poverty line is only about 1.5 million people is not worth the eradication of extreme poverty budget of only Rp66 trillion (2009) to Rp94 trillion (2010).
In 2011, Indonesia will face a food crisis and the energy world. Climate change will reduce the supply of food, especially rice on world markets. Liberalization of food and lack of role of government since the crisis proved to result in food prices increasingly hard to reach communities.
Therefore, breakthroughs are being made to encourage the performance of the state budget is not simply pushing a faster rate and higher realization. However, should the political changes in the budget so the budget is not just a collection of allocation of funds to stimulate economic growth. However, also as a political tool to maintain the level of social welfare by making changes in priorities.
4. ACCOUNTING FOR ROLE IN GLOBAL CAPITAL MARKETSIn the era of globalization, businesses and communities have become increasingly complex so requires the development of various disciplines, including accounting. Accounting plays an important role in the economic and social as any financial decisions should be based on accounting information. This situation makes accounting as a profession that is needed existence within business organizations.
The business world faster and faster and very varied. Areas that were not of the thought as the business sector is now a major sector. The development of the accounting profession to rise even more after 1985, bebarengan with the JSE. High bank interest rates encourage people to find alternatives to meet its capital requirements, increasing competition among companies to be accompanied various problems faced by companies in Indonesia. In the face of all the managers of the company was in dire need of accounting information in decision-making framework.
Accounting has developed very rapidly in line with business growth and development of securities, especially shares in the capital markets business. The American public already knows the business since 1900 (Belkaoui, 2007). In the transaction, both the investors and prospective investors have been using the company’s financial information as one of the guidelines in making predictions and for making business decisions, the investment in securities, particularly stocks. Positive developments are happening to the stock business in the U.S. capital markets also showed that companies will need capital also increased in step with market developments. This development also shows that capital markets play an important role in the economy of a country, especially the United States in that era. In addition, it also means that the needs and role of accounting information becomes increasingly important.The Role of Accounting in the Global Business SectorIndonesia’s economic downturn caused by the 1997 economic crisis mementalkan John Naisbitt predicted that Indonesia will become one of the tigers of Asia. In 2000, three years after the crisis, at a time when other countries are also affected by the crisis such as Thailand, South Korea, the Philippines and Malaysia have obtained a significant improvement of the economy, Indonesia’s economy (GDP) grew only 0.2%.
(Asian Recovery Information Center – ADB: May 2000) Tanri Abeng (1999) in Djalil (2000), states that there are six basic root of the problem that causes slow improvement in Indonesia’s economy, namely:A. It turned out that the rapid growth of Indonesia before the crisis because it encouraged more investment growth is not due to efficiency and innovation2. The majority of the market value of listed companies on the JSE was overvalued (90% of the value of publicly traded companies is determined by the growth expectation, only 10% above the real ability to earn profits; different from developed countries, 30% growth expectation, 70% of real ability)3. Company’s financial structure is not healthy (loans over 100% compared to its equity, healthy company should be below 50% of ekuitinya)4. The existence of mark-up in lending.5. Unhealthy concentrations of economic (economic pyramid, above: there are 200 private conglomerate owned by 50 families, were: almost empty.6. There is no good governance (the lowest according to McKinsey 1999)On the other hand, Indonesia faced economic challenges of the 21st century that economic globalization. Economic globalization is a process of economic activity and trade, in which countries around the world into one market power is increasingly integrated with the territorial limits of the state without a hitch.
CHALLENGES IN THE GLOBAL ERA
Globalization that has been faced by the nation of Indonesia would insist on efficiency and competitiveness in the business world. In intraregional relations concerning globalization and international competition will occur between nations. Tangible manifestation of economic globalization faced by Indonesia, among others, occur in the following forms (Damanhuri, 2003):• Financing. Global companies have access to loans or investments (whether in the form of direct or portfolio) in all countries in the world. For example, in multiplying a unit of PT Telkom telephone line, or PT Jasa Marga to expand the highway network has been utilizing the system of financing by the pattern of BOT (build-operate-transfer) with mitrausaha from abroad.• Labor. Global companies will be able to utilize the labor of the world according to its class, such as the use of professional staff drawn from workers who have had international experience and \ or workers from developing countries. With the globalization of human movement will be more easy and free.• Network information. Society of a country easily and quickly obtain information from the countries of the world due to technological advances, including through: TV, radio, print media and others. With increasingly advanced communications network that has helped to spread to different parts of the world market for the same. For example, KFC, Hoka Hoka Bento, Mac Donald, etc. hit markets everywhere. As a result, the taste of the world (both those residing in cities and villages) to the global tastes.• Trade. This is manifested in the form of tariff reduction and harmonization and elimination of non tariff barriers. Thus the activities of trade and competition is becoming increasingly stringent and fair. In fact, the transaction becomes faster because of “less papers / documents” in the trade, but can use the telecommunications networks that increasingly sophisticated technology.With the business activities of the corporation (corporate business) of the above can be said that globalization leads to increasing economic interdependence between countries through increased volume and diversity of transactions between countries (cross-border transactions) in the form of goods and services, international financial flows (international capital flows), the movement of labor labor (human movement) and the rapid spread of information technology. Global economic power led to a business corporation to conduct a review of the structure and business strategy and management bases its strategy on the basis of entrepreneurship, cost efficiency and competitive advantages. Problems of competitiveness in an increasingly open world markets is a key issue and challenge, not light. Without the capability and equipped with high competitive advantages necessarily the product of a country, including the products of Indonesia, will not be able to penetrate the international market. Even the entry of imported products could threaten the position of the domestic market. In other words, in a competitive market, competitive advantage (competitive advantage) is a very important factor in improving company performance. Many large corporations Indonesia crashing because of the crisis, as global competition, suggesting that they are not efficient.
Realizing that some big companies do not anticipate trying to be a bubble but a sustainable company company (Hasan, 2000). Good corporate governance, good corporate governance, it is believed capable of realizing that desire, because it not only aims to profit-oriented but also focus on the needs of its stakeholders. For that transparency, accountability, fairness, and responsibility is particularly important to understand both the organization and realized private organizations and public sector organizations. Accounting, as an information provider, need to realize that high quality information is the foundation of good corporate governance. Therefore accounting principals need to be aware of their responsibilities to provide information and financial statements are reliable and accurate.
Conclusion: So the difference in bringing a number of international accounting issues from the standpoint of financial analysis. Accounting to show its ability to attract public attention through the accounting and human resource measurement, reporting and audit of the social responsibility of organizations. Accounting as a profession that is needed existence within business organizations.