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.