Developing the Accountancy Profession

Running head: INTERNATIONAL DEVELOPMENT IN ACCOUNTING
International Development in Accounting
Name of the Student
Name of the University
Author’s Note

1INTERNATIONAL DEVELOPMENT IN ACCOUNTING
Introduction
There are three main objectives of the report. The first part discusses about
the differences between the financial reporting standards for registered business
organizations in the Sweden Republic and USA. The second parts discusses about
the economic factors that could explain the decision of Hugh Plc. for acquiring the
shareholdings in the subsidiary firms in Sweden Republic and USA. The last part
discusses how technology can improve financial reporting.
Difference between the Financial Reporting Standards of Sweden and US
All the registered companies are needed to adopt the standards for financial
reporting the International Financial Reporting Standards (IFRS) that European
Union (EU) has adopted in the consolidated financial statements. Since Sweden
Republic is a member country of EU, it has adopted the financial reporting standards
of IFRS (ifrs.org 2020). On the contrary, USA has adopted the financial reporting
standards of Generally Accepted Accounting Principles (GAAP) that the US
Securities and Exchange Commission (SEC) has adopted. This creates dissimilarity
between the financial reporting practice in Sweden Republic and USA.
The main objectives of the financial statements of the registered companies in
Sweden Republic is the delivery of relevant information to a wide range of
stakeholders. IFRS involves in providing the same set of objectives for the business
and non-business entities. In USA, GAAP offers separate objectives for the entities
that are involved in both business and non-business activities (ey.com 2020). This
creates difference in the performance elements as the main performance elements
of the registered companies in Sweden Republic are revenue or expenses and
assets or liabilities whereas the main performance elements of USA companies

2INTERNATIONAL DEVELOPMENT IN ACCOUNTING
include revenue or expenses, assets or liabilities, gains, losses and comprehensive
income. Required financial documents of the Swedish registered companies are
balance sheet, income statement, changes in equity, cash flows statement and
footnote; the same financial documents are necessary for the registered companies
of USA along with the statement of comprehensive income. Under IFRS in Sweden
Republic, it is expressively needed for the managements of the companies to take
into account the framework in case there is not any standard or interpretation is there
for an issue; but under GAAP in USA, there is no provision expressively requiring the
managements to take into consideration the framework in case there is no standard
or interpretation for an issue (pwc.com 2020).
Economic Factors that Could Explain the Decision
There are certain factors that can be used for explaining the decision of Hugh
Plc.to acquire the shareholdings in the subsidiary companies in USA and Sweden
Republic. Establishing subsidiaries in these locations would open up access for
Hugh Plc. to the new markets for products and services (Lebedevet al.2015). For
example, EU is one of the largest and most sophisticated markets for business.
Expansion of brand recognition could be another factor as opening branches of
Hugh Plc.through subsidiaries would provide the company with the opportunity of
expanding the reach of the brand. For example, USA attracts businesses all over the
world for participating in open and large business environment. Establishing foreign
subsidiaries in these countries could provide Hugh Plc. with the opportunity of cost
effective production and manufacturing process. At the same time, Hugh Plc. would
be able in accessing the technical skills of the employees of these courtiers along
with accessing the regional knowledge through establishing subsidiaries in Sweden
Republic and USA (Greve Man Zhang 2017).

3INTERNATIONAL DEVELOPMENT IN ACCOUNTING
As Hugh Plc. is a multinational corporation with established international customers,
it could establish subsidiaries in these location for the reason of customer service in
the business friendly locations. In addition, establishing subsidiaries in USA and
Sweden Republic could be a part of the global expansion plan of Hugh Plc. as these
countries are excellent base for conducting business. The presence of large free
trade zones (FTZ) can be seen in both USA and Sweden Republic; and this could be
another crucial factor for Hugh Plc. to establish subsidiaries in these countries in
order to avail the benefits of these FTZs. Sometimes, foreign countries offers the
business organizations to earn profit from the local economic trends and availing
opportunities of these local economic trends could be a major reason for Hugh Plc.
to establish subsidiaries in these countries (Deng and Yang 2015).
Use of Technology in Improving Financial Reporting
With the introduction of new technologies in financial services, Hugh Plc. and
its subsidiaries have the opportunity to streamline and improve financial reporting.
The enhanced pace of innovation in technology can give the company to better
access to the financial data and reports at a faster rate; it implies that Hugh Plc. and
its subsidiaries can prepare and present financial reports in quick manner in the
presence of less margin of errors. Through incorporating automated financial
reporting and analytical tools, financial teams of Hugh Plc. and its subsidiaries can
make better financial decisions through accurately track and process data for the
development of financial reports. These will assist the management of Hugh Plc. and
its subsidiaries in gaining better insight into the financial activities. These will also
assist Hugh Plc. and its subsidiaries in maintaining a detailed record of daily financial
operations and this assists in the production of annual financial reports (Miller and
Skinner 2015).

4INTERNATIONAL DEVELOPMENT IN ACCOUNTING
Through the use of automated and streamlines technologies, Hugh Plc. and
its subsidiaries will be able in incorporating real-time financial reporting. The
advanced technologies will eliminate the two major financial reporting barriers
named data quality and latency for the implementation of effective financial reporting.
Automation will provide assistance in simplifying and streamlining the management
of data as data used in financial reporting will no longer be prepared for manual
analysis (Cao, Chychyla and Stewart 2015). Apart from the automatic occurrence of
the transactions, these technologies will enable Hugh Plc. and its subsidiaries in
focussing on the hidden or buried financial data that can be of major importance. For
Hugh Plc. and its subsidiaries, no time will be needed to spend on reconciliation.
These technologies will provide Hugh Plc. and all its subsidiaries with a single and
cloud-based data source which will enable these companies to operate from the
same reliable starting point (Fanning and Centers 2016). This will largely help in the
processes of financial reporting of Hugh Plc. and its subsidiaries.
Conclusion
The above discussion shows that there are some major differences between
the financial reporting practices of Sweden Republic and USA due to the adoption of
different financial reporting framework; IFRS for Sweden Republic and GAAP for
USA. Some of the major economic factors that explain the decision of Hugh Plc. to
open subsidiaries these locations are access to new markets and products,
expansion of brand recognition, ensuring cost-effective production and
manufacturing, access to skilled employees and others. Lastly, the adoption of new
technologies will help in the financial reporting of Hugh Plc. and its subsidiaries.

5INTERNATIONAL DEVELOPMENT IN ACCOUNTING
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