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Foreign Exchange Accounting Standard – Examining the Convergence of GAAP With International Standards
Foreign Exchange Accounting Standard
Historically, for centuries Western economies have operated by a select few in power and wealth making political and business decisions in secret that affect the masses; even if those millions are unaware of these deals. As the world’s economies globalize and modernize, with information becoming instantaneous, the common notion becomes one of knowing what leaders in politics and business are doing to affect the world’s economies. The truth is that a surprising percentage of business and diplomacy internationally is still held in the “traditional” way of political and business leaders making deals behind closed doors that affect people worldwide.
In order to maintain a free and honest ECONOMY, the development and enforcement of accounting principles and regulations internationally is imperative. Traditionally, American Generally Accepted Accounting Principles (GAAP) have held stringent regulations on businesses’ reporting and disclosure of their financial transactions(2); translating to large penalties and litigation for any company who violates these principles. Internationally, accounting principles have been a mix of guidelines and recommendations (IFRS) on bookkeeping that are not necessarily enforceable by law(2). These more relaxed guidelines have allowed for some international corruption to enter into business practices. This has leaded the global accounting community to instate a universal standard for all businesses independent of country of origin. Foreign Exchange Accounting Standard
The corruption of government and business officials is “how business in Europe is done” (1). A landmark case of which spurred changes in IFRS was one with a British company whom made corrupt business deals with Saudi Arabian royalty. In the mid 1980′s, Saudi princes brokered an arms deal with the United States, Britain and Saudi Arabia and the arms manufacturer British Aerospace (BAE). Essentially the terms of the deal left BAE with government weapons contracts in the three countries involved in the deal, while the company paid almost the equivalent of 1.5 billion dollars in cash, vacations, cars and shopping sprees to the family and friends of the Saudi princes who brokered the exchange.
The money for this company spending came from a “slush fund”(1); money kept off of financial records so that most people examining them could not detect the fraud. For over thirteen years this fund paid out to these princes as BAE received renewed government contracts. Whistleblowers were kept silent for years, until media outlets discovered the fraud and the British government was forced to take action. Other notable cases include companies such as Siemens information systems and Halliburton Oil Company, which had similar issues with the use of “slush funds” to get large contracts. Those companies were charged and faced large penalties in the United States. Foreign Exchange Accounting Standard
Texas Industries, Inc. Announces Receipt of Requisite Consents
DALLAS — Texas Industries, Inc. announces the receipt of the requisite consents to adopt the proposed amendments to the indenture governing the 71/4% Senior Notes due 2013 . This announcement is in connection with the previously announced cash tender offer and consent solicitation for the Existing Notes.
