BA437/637: International & Global Business by Chapter: Chapter Twenty

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The terms CPA, GAAP, FASB, OSBA, IASB, and SOX are defined. The importance of rules and regulations is emphasized.

Capital budgeting is the process that a business uses to determine which proposed fixed asset purchases it should accept, and which should be declined. This process is used to create a quantitative view of each proposed fixed asset investment, thereby giving a rational basis for making a judgment.

Return on investment (ROI) is a widely used financial metric for measuring the probability of gaining a return from an investment. It is a ratio that compares the gain or loss from an investment relative to its cost. It is as useful in evaluating the potential return from a stand-alone investment as it is in comparing returns from several investments.

The Board is an independent group of experts with an appropriate mix of recent practical experience in setting accounting standards, in preparing, auditing, or using financial reports, and in accounting education. Broad geographical diversity is also required. The IFRS Foundation Constitution outlines the full criteria for the composition of the Board, and the geographical allocation can be seen on the individual profiles.

Multilateral netting is a payment arrangement among multiple parties that transactions be summed, rather than settled individually. Multilateral netting can take place within a single organization or among two or more parties. The netting activity is centralized in one area, obviating the need for multiple invoicing and payment settlements among various parties. When multilateral netting is being used to settle invoices, all parties to the agreement send payments to a single netting center, and that netting center sends payments from that pool to those parties to which they are owed. Therefore, multilateral netting can be thought of as a way to pool funds to simplify the payment of invoices between parties to the arrangement.

A tax haven is a country that offers foreign businesses and individuals minimal or no tax liability for their bank deposits in a politically and economically stable environment. They have tax advantages for corporations and for the very wealthy, and obvious potential for misuse in illegal tax avoidance schemes.

Internal controls are a series of policies and procedures that a business owner puts in place for the following purposes: