Managing multinational finances requires transparency and accountability on the part of departments charged with the responsibility of monitoring and making financial decisions in the firms. Chief Financial Officers (CFO) position remains one of the demanding roles in multinational administration as it entails offering strategic financial insights to the company governing offices of the CEO and the boards of management. The office, under its responsibilities, includes overseeing fiscal forecasting through accounting processes such as budgeting, balance sheets, and other financial reporting services. The CFO’s office entails engaging in responsibilities such as financial planning on a long-term basis.
The scope of operation under multinational enterprises ranges across different jurisdictions. Under the CFO’s office, it remains imperative to identify and use accounting guidelines that are inclusive and allowable across jurisdictions in which the firm operates. Different countries accept various financial guidelines, and based on their recommendation, enterprises that operate in more than one country are always advised to implement their fiscal records based on acceptable standards. As a CFO’ it would be advisable to organize and foresee the adoption of internationally acceptable standards of accounting within your organization. International Financial Reporting Standards (IFRS) as a method of accounting is acceptable by several countries. Therefore, when running an important firm valued at about $10 billion in annual revenues in a foreign country, the firm must adopt a globally acceptable standard when presenting its fiscal statements. The firm must adopt the use of IFRS as the accounting standards for the firm as opposed to Generally Accepted Accounting Principles (GAAP).
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GAAP and IFRS are incompatible in their applicability. While GAAP is a locally applicable standard used by US-based firms, IFRS is internationally acceptable, making it the relevant standard to consider for multinational organizations. The major differences anchor on their application scope that is GAAP is less acceptable outside the US while IFRS is widely accepted internationally. As such, I would prefer using IFRS as the company’s accounting principle based on its range of acceptability at the international stage since the company is a multinational.
