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).