1.

What accounting issues arise for a company as a result of engaging in international trade (imports
and exports)?

Companies engaged in international trade with imports and exports denominated in foreign currencies are
faced with the accounting issue of translating foreign currency amounts into the company's reporting currency
and reporting the effects of changes in exchange rates in the financial statements.

2. What financial reporting issues arise as a result of making a foreign direct investment?

Financial reporting issues that result from foreign direct investment are:

- conversion of foreign GAAP to parent company GAAP

- translation of foreign currency to parent company reporting currency to prepare consolidated financial
statements. In addition, supplementary disclosures about foreign operations might be required.

3. What problems arise for a company when becomes globalization?

1. Diverse Accounting Standards: Different countries often have their own accounting standards and regulations.
When a company expands globally, it needs to comply with these varying standards, which can create
complexities in financial reporting. Harmonizing financial statements and reconciling differences between
different accounting frameworks can be challenging. The increase in international trade and investment, as a
result of globalisation, has increased the need for a set of international accounting and reporting standards
that will help to harmonize company financial information, improve the transparency of accounting, and
ensure that investors receive more accurate and consistent reports. This is where the International Financial
Reporting Standards (IFRS), developed by the International Accounting Standards Committee (IASC),
comes in. Although IASC has no authority to require compliance with its accounting standards, many
countries require the financial statements of publicly-traded companies to be prepared in accordance with
IFRS. As a result, accountants around the world have to adjust to the new standards. This implies
continuously keeping abreast of currently accepted accounting standards and changing and adapting to new
requirements when needed, as local financial reporting standards are being constantly altered to conform to
the IFRS.
2. Foreign Currency Translation: Global operations involve transactions in different currencies. Companies
need to convert financial statements and reports into a common currency for consolidation and analysis
purposes. Exchange rate fluctuations can impact the valuation of assets, liabilities, revenues, and expenses,
leading to potential issues in financial reporting and performance evaluation.
3. Transfer Pricing: Global companies often engage in intercompany transactions between their subsidiaries in
different countries. Setting appropriate transfer prices for goods, services, and intellectual property becomes
crucial to allocate profits and costs accurately among the subsidiaries. However, this can be complex due to
differing tax laws and regulations across countries, and companies must ensure compliance with local transfer
pricing regulations.
4. Tariffs and Export Fees: Most countries have some type of tariff or fee that is charged to companies bringing
goods into their country. You need to know about these tariffs so you can incorporate them into the financial
planning element of your globalization plans. Also remember the legal side of globalization: you may have
to pay different kinds of fees depending on the shipping and logistics laws in place in that specific country.

As a conclusion, globalization is a phenomenon that proliferates deeply in the field of accountancy. It affects
accountants by the rise of multinationals, thus increasing opportunities and job mobility for accountants. It intensifies
the need for uniform accounting standards in the form of the IFRS. It accelerates the innovation of accounting software
and mobile digital devices. It fosters increased competition, which in turn compels accountants to move up the value-
chain and acquire professional qualifications.

Lastly, globalization increases the importance of keeping abreast with global issues and adapting to any changes that
may occur.