Question

Over the last 50 years the financial reporting systems have dramatically changed and will continue to change as the financial world faces changes such as globalization, changing regulations and the increased use of technology. The accounting profession must be ready to not only face these changes but to also adapt to them, providing relevant and reliable information to the many internal and external users of financial and managerial accounting reports.

It is important to understand the difference between managerial and financial accounting reports.

You are the chief executive officer of a multinational corporation that operates wholly owned subsidiaries in several countries. One of the company’s manufacturing plants is located in Europe. As CEO, respond to the following questions in 400-600 words:

What types of internal and external accounting reports will you use in the process of making decisions?

How will the reports differ for a multi-national corporation?

Answer 1

Answer)

All the accounts must be considered but I am describing only most important accounts in my opinion.

The types of reports that will use for decision making:

Internal accounting reports:

1)Operation accounts will be considered to see how the operations are taking in that certain country and to decide which type of strategy to follow like growth,stability,retrechment etc.

2)Reports submitted to board to see whether any excess funds, current level of competition etc.

External accounting reports:

1)Reports submitted to finance institutions and shareholders in that market get an understanding on accounting policies in that particular country.

2)Reports submitted to government of that particular country to get an understanding on tax and other laws operations.

Coming to an ordinary company it's operations is limited to a particular country and hence the CEO is aware of every thing happening in the company.But when it comes to Multi-national corporation the CEO need to understand operations and changes in accounting policies and laws in more than one country.