AC 558 Unit 6 FInal Project
A Study of the Effects Accounting Standards Have in Financial Reporting
Cornelius Andre Morgan
Kaplan University
AC 558
Professor R. Byers
October 28, 2014
Financial Reporting of the Volkswagen Group
Introduction
In today’s economic climate, companies are expanding outside of their home countries to continue to compete and expand their share of the marketplace. (Radebaugh, Gray, & Black, 2006) Something to keep note of with the increasing trend of economic globalization will be how the accounting standards in each locality affect financial reporting for these firms.
More than 100 countries have opted to comply with IFRS, or International Financial Reporting Standards which was developed by the IASB globally. Here in the United States, we have conformed to the use of U.S. GAAP or generally accepted accounting principles, developed by the FASB. There are other “local” GAAP systems across the world. Countries like Germany, India, Russia, and more have their own form of generally accepted accounting principles as well. SEC Chairman, Arthur Levitt, once said, "Financial reporting is a language, just like German or English. It is the language that companies use to talk to investors. It is the language that investors use to ascertain value. It is what people use every day to decide where to invest their hard earned dollars for financial security and future opportunity. These decisions can be hard enough. But try it in a language you don 't understand, and it becomes all but impossible. Even worse, misleading." (Bonthrone, 2000) With that said, it is easy to see why there is both a desire and a need for convergence to a uniform system of globally accepted accounting standards.
About the Volkswagen Group
The Volkswagen Group is a company headquartered in Wolfsburg, Germany. Along with being the biggest carmaker in Europe, they are one of the leading automobile manufacturers in the world offering motorcycles, low consumption small cars and luxury cars as
Cornelius Andre Morgan
Kaplan University
AC 558
Professor R. Byers
October 28, 2014
Financial Reporting of the Volkswagen Group
Introduction
In today’s economic climate, companies are expanding outside of their home countries to continue to compete and expand their share of the marketplace. (Radebaugh, Gray, & Black, 2006) Something to keep note of with the increasing trend of economic globalization will be how the accounting standards in each locality affect financial reporting for these firms.
More than 100 countries have opted to comply with IFRS, or International Financial Reporting Standards which was developed by the IASB globally. Here in the United States, we have conformed to the use of U.S. GAAP or generally accepted accounting principles, developed by the FASB. There are other “local” GAAP systems across the world. Countries like Germany, India, Russia, and more have their own form of generally accepted accounting principles as well. SEC Chairman, Arthur Levitt, once said, "Financial reporting is a language, just like German or English. It is the language that companies use to talk to investors. It is the language that investors use to ascertain value. It is what people use every day to decide where to invest their hard earned dollars for financial security and future opportunity. These decisions can be hard enough. But try it in a language you don 't understand, and it becomes all but impossible. Even worse, misleading." (Bonthrone, 2000) With that said, it is easy to see why there is both a desire and a need for convergence to a uniform system of globally accepted accounting standards.
About the Volkswagen Group
The Volkswagen Group is a company headquartered in Wolfsburg, Germany. Along with being the biggest carmaker in Europe, they are one of the leading automobile manufacturers in the world offering motorcycles, low consumption small cars and luxury cars as
References: Bruetsch, M. (2003, June 27). U.S. GAAP and German HGB - A comparative Approach. Retrieved October 20, 2014, from http://www.grin.com/en/e-book/14850/u-s-gaap-and-german-hgb-a-comparative-approach Radebaugh, L., Gray, S., & Black, E. (2006). International accounting and multinational enterprises (6th ed.). Hoboken, NJ: J. Wiley. Sindezingue, C. (2010, January 1). Does IFRS increase transparency and consequently increase investor protection Retrieved October 20, 2014, from https://www.tradebit.com/filedetail.php/215570065-does-ifrs-increase-transparency-and-consequently-increase Van tendeloo, B., & Vanstraelen, A. (2005). Earnings management under German GAAP versus IFRS. European Accounting Review, 14(1), 155-180. http://www.iasplus.com/en/standards/ifrs/ifrs8 http://www.volkswagenag.com/content/vwcorp/content/en/homepage.html