Do you remember the story of the Tower of Babel where everyone winds up speaking different languages and the townsfolk become so confused that they cannot continue the construction project?  Well, international business is a bit like that. As companies of all sizes become increasingly global, they are confronting different accounting standards, cultures, and ethics. As a result, they need financial translators to go forward with projects, minimize tax bills, and stay on the right side of widely divergent laws.

 

The translators are often international accountants, like Dugan & Lopatka, who are engaged in one of the hottest growth areas in the industry.

International accounting generally requires not just advanced education but also an understanding of GAAP both in the U.S. and several countries.  The responsibilities of international accountants can be enormous. Here’s a list of just some of the services they provide clients:

• Preparation of tax returns, as well as tax research and planning for potential acquisitions, dispositions and reorganizations.
• Help in deciding which business structure is most advantageous.
• Analysis and review of foreign effective tax rates and FAS 109 calculations.
• Support for federal and foreign income tax audits.
• International consolidation of financial information, including the translation of foreign subsidiaries’ financial statements into US dollars.
• The handling of payroll taxes in multiple jurisdictions.
• External audits.

Help in setting up policies and procedures to comply with the Sarbanes-Oxley Act, as well as foreign governance laws.

Meanwhile, professionals around the world await the potential convergence of U.S. “rules-based” accounting standards and international “principles-based” standards. The International Accounting Standards Board and the Financial Accounting Standards Board issued a memorandum of understanding in 2002 acknowledging their “commitment to the development of high-quality, compatible accounting standards that could be used for both domestic and cross-border financial reporting.”

In early 2006, the two organizations reaffirmed their shared objectives. A joint statement set 2008 as a target goal to iron out major differences and declared: “Both boards believe that a common set of high quality accounting standards will enhance the consistency, comparability and efficiency of financial statements, enabling global markets to move with less friction.”

Mark Schultz of Dugan & Lopatka sits on the education arm of the Forum of Firms.  Launched in January 2001, the Forum of Firms (FOF) is an organization of international firms that perform audits of financial statements that are or may be used across national borders. Members of the Forum voluntarily agree to meet certain requirements as detailed in the FOF Constitution. Commitment to the obligations of membership in the Forum contributes to raising the standards of the international practice of auditing in the interest of users of the profession’s services.