Global Accounting

Global Accounting Alliance

The Global Accounting Alliance (GAA) is an alliance of the top 10 professional accounting bodies of the world. They include the U.S., Canada, Ireland, Germany, South Africa, Japan, Hong Kong, Scotland, England, and Australia & New Zealand (both represent one organization). The alliance was formed in 2005 in hopes to promote quality services and tend to important international accounting issues. They work with other global regulators, especially the International Federation of Accounting (IFAC), stakeholders, and governments to regulate and improve global accounting practices. The organization provides a bond for its members so they can work more closely to address issues that have implications for multiple jurisdictions. They meet in person three times per year, and then over telecommunications for smaller conferences. Soon after their establishment, they created an online journal that publishes articles bi-monthly to provide the latest news on international financial markets.

The GAA has a main focus of reducing the complexity of financial reporting and moving toward principle-based standards. The problem is that there are legal, cultural, and regulatory principles established in different countries that make the switch to similar practices a challenge. Although it is nearly impossible to accept a single statute for auditors examining financial statements, they are doing the most they can with the other regulators to mesh ideas together and simplify practices. They also provide information about the business and accounting industry which firms can get a hold of and learn from.

The GAA also provides a passport for any member of the alliance. This means if you travel abroad to any of the ten countries that are a part of the alliance, as most accountants might have to do, you will have access to the respective services. The amount of people affiliated with the alliance is over one million, so it is a good idea to grant access to any of the major firms and their services. Some benefits that come with the membership, along with the access to other firms, include newsletters, network events, affinity products, and technical assistance. The extent of the benefits depend on the location, like the price of a specific product. Providing members with immediate access builds strong relationships, and allows them to learn ideas from different points of view (cultural or political).

An article published by the GAA magazine in November of 2014 explained the importance of succession planning, an issue they thought had a rise in concern. The article states that about half of all U.S. CPA firms will lose a top partner to retirement in the next five years, according to a survey they conducted in May of 2014. The goal of the article was to address succession issues that firms will eventually run into. They point out five major challenges that come up when dealing with filling top corporate positions. The challenges include looming transition needs, roadblocks to the path of leadership, challenges for sole practitioners, time constraints that impede planning, and problems with plan implementation. In the midst of running a business, a top priority for an executive is not to assign a successor four or five years from now. That fact of the matter is that it is an important decision to address when faced with it. The article provides tips to avoid last-minute frustration including researching exit strategy options, and creating a formal plan that has retirement rights, responsibilities, and training for future leaders.

The formation of the GAA has proved to be important by providing accountants from around the world with helpful knowledge on how to improve the practices and standards for the ever-changing accounting profession. They provide discussion boards and forums for people to provide their own insight on how they envision change. The establishment of the alliance has provided a gateway to share and exchange vital information not just in the U.S., but internationally. The idea of providing a passport to use internationally is smart because different views are able to be heard and exchanged. With their ongoing support of the IFAC and other regulatory bodies, the GAA has helped build on and improve the basic accounting practices we follow today, while also providing up to date information on international accounting news.

Accountants

What Do Accountants Do and Why Your Business Requires Them?

Simply put, Accountants are professional practitioners in the field of accounting. They’re individuals properly trained in several areas of accounting including auditing, bookkeeping, and analysis of accounts. Also, they are responsible for the preparation of annual financial statements which are used by decision makers in the company, tax authorities, and shareholders. More importantly to their employers or clients, they offer information on tax and tax laws, investment, and assessing the financial standing of organizations to make sure that there’s no wastage or misappropriation of resources within a company.

Different accounting services and how they can benefit businesses

Management accounting

This specific service entails financial record keeping and analysis of the data recorded. In this regard, the details gathered from the analysis of financial data is used to perform cost administration, budgeting, asset management, and lots of other activities.

The previously mentioned services are essential to every company as they ensure that the business is running smoothly and is keeping healthy financial practices.

Furthermore, the same information is used to plan the future direction of the company. In this regard, the accountant uses both past and present financial data to ascertain the best route to expansion. This service is highly appreciated by investors and managers.

The financial information is also used by tax authorities to make sure that the company is in compliance with the relevant tax laws and paying its duties in time.

Internal auditing

This part of accounting is vital because it helps to ensure that the resources of a company are used only for the benefit of the company. In completing audits, the accountants look into the internal financial management structures with a keen desire for determining if there’s any embezzlement or wastage of money.

This specific service comes in handy because it provides business owners and managers an idea of where the company money goes to, what the money does and, moreover, the different possible ways to decrease the business running costs.

Strategic planning

Every company should have some bearing of how to start and sustain development in an ever-competitive business world. In this regard, the best strategies are those based on financial administration. Accountants provide viable growth strategies which have financial management entrenched in them.

Financial consulting

Keeping up to date with the latest trends in the business management world is a way to make sure you improve your company. Nevertheless, this can prove to be very difficult as directors and managers are too busy with running their companies. This is where Accountants come in handy. Accountants offer consultancy services where they help businesses on matters of taxes, business planning, investment opportunities and many other services.

Globalization

How Globalization Is Changing The Accounting Profession

The idea of globalization is something that has been coming around for a while. For those who do not understand what globalization is, it can be defined as “a process of interaction and integration among the people, companies, and governments of different nations, a process driven by international trade and investment and aided by information technology.” As you can see by the definition, the process of globalization interacts with international trade and investment. The one thing that is constant with trade and investment is that at some point you receive something for your investment or trade.

This is where the profession of accounting comes into play. Accounting can be defined as, “is the systematic and comprehensive recording of financial transactions pertaining to a business, and it also refers to the process of summarizing, analyzing and reporting these transactions to oversight agencies and tax collection entities.” Accounting is a key component to any business structure anywhere in the world. This brings us to how the two are connected to each other. International trade and investments bring up certain situations that cause a change to how we are used to being accountants. The areas we will look at are how globalization affects the change in going away from US orientated GAAP principles. As well as, how globalization now forces accounting firms in America to become familiar with accounting rules from other countries and the threats that the accounting profession face.

For many years, every American firm has been following the same updated guidelines known as Generally Accepted Accounting Principles or GAAP. The guidelines for GAAP have been rapidly changing over the years. When we look at what may happen to with GAAP we can look towards IFAC or International Federation of Accountants. The idea of globalization is spreading more and more every single day and it is affecting our daily lives more than we can imagine. The International Federation of Accountants have been working since its foundation in 1977 to create and international set of standards and practices for accounts around the world. The result of the International Federation of Accountants bringing together an international set of rules and regulation will then allow an easier transition with the globalization process.

With America having the chance to move away from GAAP and the IFAC not having a set rules and regulations yet, it forces the firms of America to become more common with foreign policy. In the past, it was almost a guarantee that you would only have to become familiar with the tax rules and regulation of the country that you planned to work in. In today’s world that guarantee is not as solid as it was in the past. The economy of the world is changing more drastically each and every day. The multinational businesses around the world are making global economies becoming more and more interconnected. Globalization is a big part of the how the world’s economy is becoming more connected. This brings us to our new issue regarding how in today’s world an accountant must be familiar with tax regulations from around the world. For example, if a bank has an office in the United States as well as in China and offer bonds to both places. If an accountant is doing taxes for a client who lives in American and China who have bought the same bond from the bank, each tax form and regulation may be different depending on which country you live in.

As much as globalization can cause for smoother transition between accounting firms throughout the world, there are threats that we as accountants face. If you are an accountant for the Securities and Exchange Commission (SEC) you face problems with the idea of changing systems throughout the world. With change, comes confusion and with confusion comes the opportunity for someone to take advantage of something they shouldn’t be. They face the fact that people in this world will always look to beat the system and someone out there will try their very best to do it. Another threat that accountants face is the idea that many of the accountants who are not familiar with international regulations will end up unemployed. Globalization caused a very heavy strain on accountants who have been employed in America for a long time and now have to learn a brand new set of rules and regulations. At the same time it puts a lot on the plate of a young and upcoming accountant who is trying to make it in this hectic business world.

All in all the idea of globalization is one that not only accountants but the world can’t avoid. The technology today is amazing and is making the world more and more connected every single day. Accounting is a pivotal part of every business operation around the world and just like everything else it will change with the process of globalization.

Role Based

Role Based Access Control

Role-based control system exists because of a number of factors, including multi-users and multi-application online systems. The roles are assigned as per the task at hand and the competency of the user. It should be noted that the role is assigned by the management to a post rather than a person.

There are different types of users using accounting application in use. This should not mean that all users have equal access to the information generated during the course of the business. This equal access for all is not desirable from a number of views, including security risk and the risk of secrecy. It if for a reason that applications differentiate between types of users. Users can range from super users, admin and users. Within each of the type, there can be sub-types so that the work of the organization is run smoothly without any obstructions from within.

The hierarchy of the roles is decided by the management. The hierarchy can be understood from the names themselves: Super users, Admin and Users. Super users are at the top, with access to everything, including changing the attributes – adding, removing, changing – of Admin and other users. This changing authority of super admin is also extended to the attributes of the business. The “user” ones have a bare minimum of access to administrative functions; rather, they are allowed to make a little change, that includes adding or removing attachments, loading default settings. This part is also able to be created by Admins.

Having assigned the roles, the concerned user is authorized to the issues that have been demarcated. It is this assignment of roles that makes for a clear hierarchy, which makes management easier. This does away with multiple logins and multiple passwords associated with it. Role based system also makes economical sense as all the users can use a single resource – here accounting application – and this makes further processing of work even streamlined. The way hardware and software are shared among the users, assigning role within a system makes sense considering the financial gains that can be made.

Also reduced is the cost of monitoring the employees as well as the administration costs. Likewise, any changes to the existing system, including an addition of new staff and therefore there will not be a manual assignment of duties. While there are different types of users, what should not be confused is that these personnel can be brought together – usually, it is the ones who are horizontally rather than vertical similarity. This makes collaboration easier.

In addition to collaboration, security administration is also facilitated by role-based access. And the security is of the financial information as well as of the assets of the business. This has implication for foreseeing a properly implemented internal controls. With a single source from which to monitor the users, there is low administrative cost as well.

Global Payment

Choosing Foreign Currency Accounts For Global Payment Systems

Once your company meets the carrying capacity in a domestic market, you may start planning on looking for opportunities in a foreign region. There are a lot of benefits and opportunities you can get from international trade – ones that are otherwise unavailable in the domestic market. However, there are a lot of factors that come into play which most business owners are not prepared to face.

If you are looking to set foot on international trade, you will have to analyze your current position in the domestic trade and weigh the benefits and challenges you get there. Additionally, in order to take advantage of the opportunities, choosing the right option for global payment systems should also be one of your priorities.

If you are going to have trades overseas, opening a foreign currency account is important. This will allow you to send and receive payments made in another country in a much easier fashion. Setting up a foreign currency account for your business will allow you to save money without the need to pay conversion cost. Additionally, other risks that are associated with foreign currencies such as fluctuations can also be avoided.

Owning a foreign currency account isn’t much different from owning an ordinary current account. The account is managed the same way, however, different banks have different criteria and charges may vary from one another. Additionally, when opening a foreign currency account, your company will undergo due diligence procedures.

Depending on the country you will be having business deals with, retaining the payments in that currency can make things a lot easier for you to make payments as well as prevent conversion costs. The cost of conversion can vary anywhere between one to 10 percent which is quite the amount already. Moreover, there are also some companies who purchase currency ahead of time and deposit it into their account. This is one of the steps some companies take in order to avoid fluctuations in exchange rate. However, it can affect your company’s cash flow so it is important to consider it carefully before doing it.

Lastly, opening a foreign currency account will allow you to have a cheque book for your foreign currency transactions, funding for short-term cash flow needs, as well as simplification of global payments. However, there are also downsides to having a foreign currency account. One such is the bank charge which is quite high. When opening this account, be sure to weigh this factor as well as the advantages to ensure you get the most of what you need.

Business Finances

Finding the Right Program to Manage Your Business Finances

Identify your Needs

When it comes to small business accounting software, you need to find your needs. This will help you match up with the right program. You need something that can help you take care of specific tasks for your business. If you sell goods, one with inventory controls can be very useful. It can help you cut funds tied up in inventory but also prevent you running out.

Security

It is important to think about the security features the program offers. You may have sensitive information in there and you need to know it isn’t going to be compromised. Don’t overlook this when you are comparing programs to decide what is the better overall value to you. Find out if they offer you regular updates for security too.

In addition to security, a program offering you customer support is very helpful. They can help you to access features, troubleshoot, and to gain information on something you aren’t familiar with. Some programs have online training and videos too that can help you decide if it is a good match for your business.

Customised Reports

Your business will need a variety of reports to check where it is doing well and what needs to be improved. In addition to the common business reports, look for small business accounting software that allows you to customised information. Then you can create specific reports that relate to your business in very little time.

Such information can help you with comparisons, analysis, and with presenting information to your board or to financial backers. It can be a way for you to determine expanding your business or where you need to make some changes to help your business do better. Being able to track your overhead expenses can give you facts to determine where you can make reductions.

Easy to Navigate

The features offered with small business accounting software can vary based on the specific program. Identify the features you need and think about those that may offer you value. If you can work with some demos, that will show you what can be done with particular features. Look for a program that is easy to navigate. The value isn’t going to be there if it is hard to work with.

In addition to navigation, look for a small business accounting software offering some internal checks and balances. This will help to cut the risk of accidental errors. It can help to give you some security against internal losses due to fraud. You can’t be too careful when it comes to what is happening in your business.

Future Needs and Growth

Where is your business headed? Think about the future and the growth you would like to experience. Think about your goals for changes and even new products or services you wish to carry out. You need small business accounting software that will be flexible enough for you to change what is set up as your needs change.

This will prevent you from buying something that you have to replace in the near future. A program offering ongoing updates will last because technology can change often. Take your time to find a good fit for your needs and the type of business you run. It will allow you to run this side of it efficiently and securely.

Donald Trump’s Tax Plan

Donald Trump’s Tax Plan and Its Effect on the United States Nationally, Globally and Its Citizens

Donald J. Trump initially proposed his tax plan of cutting taxes for businesses and the middle class while campaigning for the primaries. In August he revised his plan and added many details including Tax Brackets, Standard deduction changes, corporate rates and eliminating the gift/estate tax. Furthermore, Donald J. Trump’s plan could have an effect on the economy at domestically and globally. In this paper, I aim to simplify the effects of his tax plan, on the individual, the United States and examine some assumed outcomes for the United States from a global perspective.

Individual
Let’s face it, there are not many people on this earth that think about the good of their country before the good of their own wallet. Trump’s tax cuts are close to home and can help the average American. He proposes doubling the standard deduction and lowering effective tax rates across the board. This means that around $8,000 for single filers and $16,000 is completely untaxed; combined with the fact that most incomes will see a lowering of effective tax rates, everyone will be paying fewer taxes.(Fox, Pg. 1) Trump’s system is very appealing across the board, but only two groups benefit greatly. First, since the standard deduction and the 0% tax bracket are increasing some families earning low incomes could experience no tax at all. The second group that could experience a massive tax break is multi-millionaires.

“… the highest-income 0.1 percent of taxpayers (those with incomes over $3.7 million in 2015 dollars) would experience an average tax cut of more than $1.3 million in 2017, nearly 19 percent of after-tax income.”(Nunns, Pg1)

Some people compare Trump’s tax plan to an escalated version of the George W. Bush tax cuts. Another issue with Trump’s tax plans is they are very vague in substance and impractical in today’s society where corporations and individuals take advantage of every break possible. One loophole that exists is that individuals can set up LLCs and like corporations and actually lower their tax rate, this is due to very low unearned income tax rates. By funneling all of your income through these mock corporations, individuals could create a tax ceiling of 15%(Trump’s unearned income alternative rate) even though the normal tax brackets go up to 33%. Now, it can be reasonably assumed that this plan once brought to a cooperative congress would be tightened up with many more rules added to eliminate glaring loopholes and problems with the plan. In the case of a democratic house or senate, these tax reforms could be shot down entirely. With the assumption that his whole plan goes through the decrease in tax revenue could create a strained relationship between the United States’ revenue stream and the expenditures they have budgeted for, thus influencing their ability to create an economic incentive for the U.S. economy.

National
On a grander scale than the individual, the United States economy would change due to Trump’s tax plan. After the individual changes are accounted for, the corporations would be the next largest factor. Trump plans on dropping corporate tax rate considerably, which would create an upwards swing in after-tax profits. This benefit could go two ways; first corporations could pay the excess profit out to shareholders in dividends or second corporations could reinvest the extra money into retained earnings. Either way, this would give an injection of good profits and growth to the economy. In terms of United States tax revenue, this growth caused by the tax break would make up for some of the deficit in tax revenue even more so if most of these profits were distributed in dividends. To further decrease the tax deficit Trump has proposed a one-time offshoring tax that would be paid by any U.S. firm that has moved its operations overseas. These measures could eliminate the deficit in the short term, but long term the deficit could arguably skyrocket. This is due to a drop in tax revenue and a projected increase in spending. Some major expenditures would include border security (the wall) and increases in military spending. Trump has promised to decrease expenditures in other facets but has only stated that he will eliminate inefficiency and cut out waste. Trump’s economic policy is not very favorable for the United States economy. Due to increased globalization and low reinvestment of profits, the initial gain from Trump’s plan diminishes and actually reverses. Overall, Trump’s plan could be very bad for the economy, especially if previous tax cuts are any indication of their effects. (Zandi, pg 2)

Global
Internationally, the United States is no longer the world’s only powerhouse. With a multitude of other countries on par with the US and winning in some facets. The United States is in no place to fall behind. The biggest problem with Trump’s tax plan and his overall economic policies is

Globalization

Globalization: The Impact It Has on Taxation

Globalization is the process of increasing connectivity and uniting the worlds businesses. It has developed over the last couple of decades. As the internet emerges, globalization emerges as well, which makes it easier for people to travel, communicate, and conduct business internationally. However, as globalization has risen, so have pro-globalization and anti-globalization lobbies. The people for the pro side say that it brings out increased opportunities for everyone. The people for the other side argue that certain groups of who are deprived of resources. These groups are not capable of functioning in the increased pressure.

The fact that globalization links the world’s major companies to make it more universal, drastically impacts the majority of the world’s populations. This is because these companies find loopholes in the system by hiring accountants and lawyers to scheme their way around paying large amounts of tax. The average person is deprived of fair tax laws and the burden to make up for these large amounts is put on them. Globalization, however, is thought to reduce the ability of governments to collect taxes. Most economists support globalization due to the fact that it raises people’s income through the world economy and a competitive business market. The U.S. government has already given up massive amounts of political and economic powers to global organizations. Many people see globalization as sending millions of jobs which destroys the standard of living in the United States. These companies giving jobs to people overseas who will work for less and less benefits, is having a devastating impact on manufacturing in the United States. As capital and labor become more international, the international tax competition increases. Globalization makes it harder for countries to tax at high rates because people and capital will flow out. With tax competition, individuals and businesses gain the freedom to take advantage of low tax rates abroad. On the other hand, globalization could result in more trading which creates more jobs because more resources will be available.

This trend of globalization is becoming more popular as technology and communication improve. This results in financial professionals recognizing two needs to better the global economy. The two needs consist of a universal set of accounting principles and a highly technical workforce to continuously improve them. Although globalization has brought about new opportunities, they create a very complex business environment. Globalization has significantly affected the design of fiscal policy.

It is believed that studies employing effective tax rates, result in a negative impact of globalization on capital tax rates while studies relying on tax capital revenues positively impact market integration on capital taxation. Also, scholars believe that employing corporate profits and capital gains as proxy of the capital ax base may be crucial. Corporate profits are the most mobile form of capital according to these scholars. Market integration measures that are based on actual flows of trade better reflect international economic integration. The globalization index by Quinn, can better capture international capital market integration. However, according to the globalization index developed by Dresher, it can capture the various political and social features of globalization.

One advantage of globalization is that businesses or individuals have the ability to do business in countries outside of its country. Certain countries have something called a tax haven which is considered an area where certain taxes are offered at a lower rate. Other things that are offered by other countries are double taxation agreements and tax holidays. Double taxation agreements promote globalizing businesses and avoid double taxation of the businesses. Tax holidays are the most popular tax incentives. They allow exemptions from paying taxes for a certain time period. These are all advantages of globalization in countries.

However, there are also negative impacts on taxation due to globalization. It may benefit individuals and businesses to do their operations in other countries, but it hurts the countries that these businesses reside in. Tax havens have a not so good effect on the residing countries of these businesses. They ultimately take tax revenues away from these countries. Although tax havens seem like a necessity, there is also a burden that tax havens cause to their home countries. Another disadvantage is that tax holidays will make businesses shift income into tax havens and away from reinvesting in the United States.