International Financial and Managerial Accounting

By Waxman, Robert N. | The CPA Journal, May 2002 | Go to article overview

International Financial and Managerial Accounting


Waxman, Robert N., The CPA Journal


INTERNATIONAL FINANCIAL AND MANAGERIAL ACCOUNTING By Ahmed Riabi-Belkaoui Quorum Books: $ 72; 379 pp. plus index; ISBN 1-56720-416-3

The author states that his goal was to identify the issues and problems that are most critical to the management of multinational companies and to give practical solutions to international accounting problems.

The intended scope and coverage are broad, and each chapter includes footnotes and selected readings. However, this is largely a book of lists used to organize a huge amount of information. Moreover, much of the information is not explained, some of it seems unnecessary, and many of the lists are derived from other sources. The book has too much filler and not enough meaningful content. Most of the selected readings are from the 1970s and 1980s, which creates the mistaken impression that no more up-to-date reference materials are available.

The text has certain specific problems. In Chapter 1 --

* The Form 8-K due dates for reportable events are only partly correct.

* The International Accounting Standards Committee (IASC) was renamed the International Accounting Standards Board (IASB) effective April 1, 2001. For a book published in November 2001, either the text could have been updated or the author and publisher could have provided an errata sheet.

* The book states that multinational corporations (MNC) face a diversity of accounting standards and that they need to be sensitive to "operational international accounting standards." But the author never reviews the current international accounting standards and exactly how they can help in the conduct of international operations.

In Chapter 2--

* This chapter on taxation is based on old sources, and some of the topics have little to do with today's international business. For example, the book states, "large shareholders can use any of several complex Wall Street strategies to raise cash and lock in their stock market profits without actually selling their shares, which would create a tax bill," but it never addresses what these strategies are and how they work.

In Chapter 3--

* The overview of exchange rate risk management and economic exposure is interesting but misses the book's avowed aim of addressing "the normative solutions to international accounting problems." The author discusses the regression equation but does nothing with it. A later discussion of applying regression analysis models (with many formulas) also goes nowhere.

* The Eun and Reswich monetary approach is discussed along with the empirical equation for the natural logarithm of the spot exchange rate, but none of this material gives management any practical tools with which to run a MNC.

* Appendix 3.1, "Major Market Indexes as of Nov. 29, 2000," serves no apparent purpose other than filling three pages.

In Chapter 4--

* In a bulleted list of eight different swaps, only one specifically mentions foreign currency (i.e., cross-currency interest rate swaps). Missing is a description of the hedge, the tax impact, and the accounting for both the derivative and the hedged item.

* Equity swaps are mentioned with no discussion of either the tax or accounting impact.

In Chapter 5--

* Other than the limited discussion of EVA, this chapter may be of interest to management, but will be of little interest to accountants and auditors.

* Terms such as return on investment (1101), economic value added (EVA), and total cost of ownership (TCO) are mentioned and explained, but the chapter gives no examples of how to use them for international financial management. …

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