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Shahrokh M. Saudagaran, International Accounting: a User Perspective.

SHAHROKH M. SAUDAGARAN, International Accounting: A User Perspective, 2nd Edition (Mason, OH: South-Western, a division of Thomson Learning, 2004, xv, 236pp).

The text appears aimed at those wanting a shorter, readable international accounting book that can be used either to supplement a major text or to be the main text where outside articles, websites, and cases are added to achieve course goals. The book itself states that its primary audiences are upper-division undergraduate students, graduate students, and participants in corporate university courses. Therefore, it is designed to give international accounting much greater coverage than typical Advanced Financial Accounting texts while being much shorter than many traditional international accounting textbooks. The user approach means that the text has relatively few "debits and credits," does not really cover tax and auditing topics, and is directed at a much broader audience than just accounting majors. Indeed, it is very usable in courses with nonaccounting majors. Overall, the text achieves its objectives quite nicely.

This edition of the text is very similar in structure and content to the first edition. The text is divided into seven chapters. Chapter 1 provides a good background on the various environmental factors and diversity that exists in financial reporting around the world. It briefly introduces classification studies and harmonization.

Chapter 2 focuses on the harmonization of financial reporting standards. It provides a very good background to the various issues and institutions involved with harmonization. However, given the many recent changes, it is the weakest chapter. The 2004 copyright date belies the fact that the text was in print in early 2003 and that most revisions must have been done in 2002. Even so, I expected a much larger and more up-to-date discussion on convergence that was centered on the importance, structure, and operations of the International Accounting Standards Board (IASB). Also, given the user approach, I felt the space devoted to the UN and OECD could have been better used. However, it must be noted that with the many rapid changes in the field, current articles and websites will have to be used to supplement whatever international accounting text one selects.

Chapter 3 examines accounting for currency exchange rate changes and discusses translation (accounting), transaction, and economic exposure. The text provides examples of journal entries when currency rate changes affect transactions. It then has a conceptual discussion of the four major methods of foreign currency translation. The latter part of the chapter focuses primarily on practice in the U.S., including the functional currency concept. These topics are covered in a more limited way than in many Advanced Financial Accounting texts.

Chapter 4 explores selected international financial reporting and disclosure issues: inflation accounting, goodwill and other intangible assets, segment reporting, and social and environmental reporting. Overall, the chapter provides a good discussion of these issues and has some new and very interesting exhibits. My preference here would be for some discussion of segment reporting research since 1999.

Chapter 5 discusses using corporate financial reports across borders. The first part of the chapter describes various methods, such as doing nothing, convenience translations, convenience statements, limited restatements, reconciliation to a foreign country's GAAP, and secondary statements using either another country's GAAP or international accounting standards. All examples have been updated. The second part of the chapter explores a variety of related issues, including user and preparer responses, international financial statement analysis with a focus on key common accounting differences, and differences due to countries' institutional settings (using Korea and Japan as examples). The chapter concludes with a brief discussion regarding the availability, reliability, and timeliness of data as well as language, terminology and format differences.

Chapter 6 discusses financial reporting in emerging capital markets. The chapter in the second edition has been updated and expanded. It now includes sections on Caveats Based on Recent Developments, Mexico, and China (PRC).

Chapter 7 discusses managerial issues in international accounting. Topics include budgeting, performance measurement, transfer pricing, multinational capital budgeting, managing foreign exchange risk, and global information technology challenges and strategies. The middle section has an extensive discussion of transfer pricing, including advanced pricing agreements.

The text is very readable and is filled with good illustrations. If an instructor supplements the text with other readings, material from websites, and cases, than the text can be effectively used on its own for an upper-division undergraduate or graduate course in international accounting. The text itself suggests many good websites to use and incorporates the use of websites in many assignments. Each chapter is also fairly self-sufficient, so a chapter or two could be skipped by an instructor without any major difficulties. In the next edition, I hope that the number and variety of exercises and cases will be increased, especially those requiring computations related to inflation accounting and currency exchange rate changes.

Besides the text, an instructor's manual exists that includes chapter outlines, a partial solutions manual, a test bank with true/false and multiple choice questions, and transparency masters. PowerPoint[R] slides were also available on the publisher's website. For the first edition, the test bank and PowerPoint slides were a bit thin from the perspective of someone who is quite familiar with international accounting, but should be quite helpful for someone who is not as familiar with the teaching of international accounting.

In summary, this shorter text provides good coverage of basic international accounting topics from more of a user approach. Because it provides far less coverage than traditional international accounting texts, it may not be best in a graduate class designed only for accounting majors. However, this readable, accessible text is flexible enough to be used in a variety of courses, especially graduate courses where students have a limited accounting background and upper-division accounting and international business courses.

Robert K. Larson

University of Dayton

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Author:Larson, Robert K.
Publication:Journal of International Accounting Research
Article Type:Book Review
Date:Jan 1, 2004
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