Unit 12 Reading Activity

Listen to the audio recording while you read the text. When you understand everything, please continue to the next activity.

International accounting

Mary Pross: It's great to have you on the team John. I'm sure you will enjoy working with us. Have you settled in to the new house yet?

John Sinclair: Thank you, yes we finished unpacking last night.

Mary: Good. Now, I know that you worked in our London office for many years, but you will find a few things different here in the Boston office.

John: Yes, I have been studying the different practices here in the US. I do have a few questions though.

Mary: Of course, what would you like to know?

John: Firstly, I'd like to know when dividends should be recorded? In the UK we show them in the period they relate to.

Mary: Here, we show them in the period they are declared.

John: Ok, and can you tell me what an extraordinary item is? I don't really understand it.

Mary: Ah yes, you wouldn't have heard of this before as it is only in the US. Basically, it is something which is either very infrequent or rare.

John: Thank you.

Mary: Oh, and you do know about the exemptions for specific investments on cash flow statements.

John: Yes, I noticed that.

Mary: Ok, well if you have any more questions, just let me know.

John: There was something else. I wanted to clarify the position on tax deferrals. In the UK, we only allow for non-current treatment, but I read that in the US you can also treat the deferrals as current. Is this right?

Mary: Yes that is correct, but we don't really do that here.

John: Great, so I don't need to worry about it.

Mary: No, but you will have to pay attention to the convertible debt.

John: Don't you split it between equity and debt?

Mary: No, it is treated as a liability.

John: Looks like I still have some reading to do!

Mary: Don't worry, there are a lot of differences. I spent two years in the UK and had a really hard time trying to learn the way you do things.

John: What did you have difficulties with?

Mary: It may sound silly, but I just couldn't remember the different terms used.

John: Like what?

Mary: Well, for example - in the UK you say "stock" but here we say "inventory" or another, we say "allowance for uncollectable accounts" but you say "provision for bad debts"

John: Yes, I know what you mean - I was reading about income statements last night and it took me almost an hour before I realized that it is another term for profit and loss accounts.

Mary: Ha ha.

John: The good thing is that a lot of the same laws apply in both countries, so it is not all new. Mostly both systems follow IFRS to some extent.

Mary: Exactly, the most important thing is that you record everything accurately and then you can always amend the accounts at a later date.

John: And I am right in thinking that Mark will be overseeing me for the first month?

Mary: Yes, he will be able to assist you if you need any help, but I believe he is out of the office until Thursday.

John: Holiday?

Mary: He wishes, no. He is attending a training session on the new regulations for escrow accounting.

John: New regulations? I read the 2013 regulations last night, do you mean those?

Mary: No, they changed again and the new regulations supersede the 2013 rules.

John: Seems the law changes even faster here than in the UK.

Mary: Yes, it drives our comptroller crazy. He says he spends more time training on new regulations than actually working!

John: So it's not just me who needs to study up a bit. Thanks for the help.