Establishing an effective internal audit function to help maintain control over foreign operations. Differences in culture, customs, and language must be taken into consideration.
G. Deciding whether to cross-list securities on foreign stock exchanges, and complying with local stock exchange regulations to do so. This could involve the preparation of financial information in accordance with a GAAP different from that used by the company.
IV. As companies have become more multinational, so have their external auditors. The Big 4 public accounting firms are among the most multinational business organizations in the world.
V. Problems encountered by MNCs when confronted with different local GAAP in different countries leads to the desire for accounting harmonization. There would be significant advantages to MNCs if all countries used the same GAAP.
VI. The world economy is becoming increasingly more integrated. International trade (imports and exports) has grown substantially in recent years and has become a normal part of business for relatively small companies. The number of U.S. exporting companies more than doubled in the 1990s.
VII. The tremendous growth in foreign direct investment (FDI) over the last two decades is partially attributable to the liberalization of investment laws in many countries specifically aimed at attracting FDI. The aggregate revenues generated by foreign operations are twice as large as the revenues generated through exporting.