Transnational Accounting, Second Edition

Review by Robert N. Waxman

This massive “book” is an impressively well-organized and meticulously researched reference tool dealing with the accounting in 19 countries, plus the requirements of the European Union and the International Accounting Standards Board (IASB). The following countries are included:

• Americas: Argentina, Canada, and the United States
• Asia-Pacific: Australia and Japan
• Europe: Members of the European Union—Austria, Belgium, Denmark, Finland, Germany, Italy, the Netherlands, Portugal, Spain, Sweden, and the United Kingdom—plus Norway and Switzerland.

Each country is treated in two chapters: “Individual Accounts” and “Group Accounts” (i.e., consolidation issues). The chapters are for the most part uniformly structured, which aids researching the same issue in each country and allows for comparability across all the chapters and across all the countries.

The reference matrix in Volume I—also included as a separate softcover book—deals with all the included countries in conjunction with the recognition rules for assets and liabilities, valuation and revaluation rules, and issues dealing with consolidation, proportional consolidation, the equity method, and deferred taxes. This matrix serves as a kind second index.

Each “Individual Accounts” chapter contains the following:

• Introduction and background
• Forms of business organization
• Objectives, concepts, and general principles
• Bookkeeping and the preparation of financial statements
• Balance sheet and profit-and-loss account formats
• Recognition criteria and valuation
• Special accounting areas
• Revaluation accounting
• Notes and additional statements
• Auditing (filing and publication)
• Sanctions
• Financial reporting institutions and national databases.

Each “Group Accounts” chapter contains the following:

• Introduction and background
• Objectives, concepts, and general principles
• Group concept and preparation of group accounts
• Consolidated groups
• Uniformity of accounts included
• Full consolidation
• Proportional consolidation and equity method
• Deferred taxation; formats; notes and additional information or statements
• Auditing (filing and publication)
• Sanctions
• National databases and bibliography.

The book also contains a section devoted to definitions of specialized accounting terms, a language table that translates English terms into 11 other languages, and a comprehensive table of contents and index.

Without describing all of the book’s other features in detail, it must be said that the editors achieve their goal of making an exceedingly complex topic easier to deal with, notwithstanding the challenge that accounting rules differ greatly among the countries included. In fact, this 3,000-plus-page book clearly illustrates just how far we have to go to achieve accounting “convergence.”

This book is a unique reference: It is much more than a survey of divergent accounting principles, auditing standards, and rules and regulations. It is a massive research study of much of the inner body of national and international accounting and reporting, and while it does not plumb the depths of local GAAP for each country, it is the most ambitious and best reference tool that is publicly available.

The book’s biggest strength is its comprehensive coverage of its subject. It contains an enormous amount of detail, plus many examples and illustrations. While some coverage is out of date (e.g., the U.S. GAAP chapters discuss SFAS 125 but not SFAS 140), no book is ever complete and wholly up to date. This one successfully captures a moving target.

This book belongs in the library of corporate accountants, CPAs with an international accounting and auditing practice, CPAs consulting with international clients, CPAs who are internationally affiliated, CPAs with a compulsion to own every reference book, and anyone else involved in international financial accounting and reporting.

Having personally used the book to answer questions about the accounting treatment for specific transactions in specified countries, this reviewer can attest to its usefulness. I quickly found answers to questions on consolidations, the purchase method, and goodwill. I fared less well when researching the accounting treatment of asset securitization transactions and hedging with derivatives, topics that were perhaps too narrow for inclusion.

So the questions are: Can it answer every question? Well, no one book can. Is it useful? Yes. Should you buy it? Yes, if your practice has any international flavor. Could it be improved? Yes, a CD would make its use even simpler and would give its users comfort that they found everything concerning the subject that they were researching.

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