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CHAPTER 11 Accounting for Decision Making 385

Business firms today are unlikely to need armed ships to fight off pirates, but
international trade still has its problems, such as tariffs, language barriers, cultural
differences, and incompatible equipment standards. The accounting information
system provides crucial information to management for evaluating the viability of
a firm’s international operations. Additionally, the AIS provides information to
external entities concerned with the firm’s international activities.

International Information Flow

Multinational firms have no choice but to comply with the rules and regulations of
the countries in which they operate. Furthermore, multinational firms must take
into account the international organizations that define and restrict the flow of
information, including accounting information, between nations. Several major
organizations are shown in Exhibit 11.4.

International Accounting Standards Board
The International Accounting Standards Board (IASB) issues International Finan- International Accounting Standards
cial Reporting Standards (IFRS), which build on International Accounting Stan- Board (IASB) A London-based
organization that issues International
dards (IAS). The current structure and organization of the International Accounting
Accounting Standards
Standards Board came about as a result of a strategy review undertaken by its pred-
International Financial Reporting
ecessor body, the Board of the International Accounting Standards Committee. IASB Standards (IFRS) Accounting standards
publishes its standards in a series of pronouncements called International Financial issued by the International Accounting
Reporting Standards. The IASB has also adopted the body of standards issued by the Standards Board that have three goals:
Increasing harmonization of accounting
Board of the International Accounting Standards Committee. Those pronounce- standards and disclosures to meet the
ments continue to be designated International Accounting Standards. needs of the global market; providing an
accounting basis for underdeveloped or
newly industrialized countries to follow
as the accounting profession emerges
EXHIBIT 11.4 in those countries; and increasing the
compatibility of domestic and
International Organizations Concerned with Transborder Data Flow international accounting requirements
International Accounting Standards (IAS)
Accounting standards issued by the
Council of Europe Chiefly concerned with protection of personal privacy. Board of the International Accounting
(COE) Composed of 21 western European countries and Standards Committee, and subsequently
based in Strasbourg, France.
adopted by the International Accounting
Organization for Set up guidelines to facilitate unrestricted transborder Standards Board
Economic Cooperation data flow among countries that maintain appropriate
and Development (OECD) domestic privacy legislation, while warning member
countries of the potential for imposed sanctions if
their privacy laws are inadequate. Composed of 19
western European countries plus Australia, Canada,
Japan, the United States, and New Zealand.
Intergovernmental Bureau Assists member countries in acquiring benefits from
of Information (IBI) transborder data flow technology. Considered an
importers’ advocate. Membership in the IBI is less
than 40 countries, which are primarily from the Middle
East, Latin America, Africa, and Europe. Based in
Rome.
International Mandate includes assistance for third-world countries
Telecommunications that are establishing and maintaining communications
Union (ITU) networks. Part of the United Nations. Includes over
160 countries.
United Nations Originally founded to establish a global bibliographic
Educational, Scientific, system to facilitate exchange of information. Emphasis
and Cultural Organization changed to restrictions on information flow; conse-
(UNESCO) quently, the United Kingdom and the United States
withdrew from UNESCO.

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