Accounting_Reporting_Criteria

Accounting Reporting Criteria Paper Companies, whether they are located within the United States or in a foreign country, have many accounting reporting criteria that they need to manage. Miller Brewing Company, the second largest brewing company in the United States, and Heineken International Brewing Company, the largest brewing company in Europe, both manage the different accounting reporting criteria that is needed to continue their success in the beer brewing industries. Analyzed below is how these two companies manage their regulatory environment, issues with foreign currency, and the differences in GAAP in there own country and internationally. Regulatory environment consists of laws and regulations that have been develop by federal, state, and local governments in order to exert control over business practices. (Kimmel, 2007). The FDA (Food and Drug Administration) ensures the safety of American Food Supply whether imported or made in the USA. (US Department of Health and Human Services website) Both companies must comply with the FDA’s regulations in order to sell beer in the United States. Anther concern for both companies is the conservation of the water supply. North Carolina’s American Water Works Association and the North Carolina water environment Association is a regulatory environment that the Miller Company is working with on a continuing bases. The goal of this organization is to provide water and wastewater education, training, and service in an effort to protect public health and the environment. (NCDAFEWater.org). Amsterdam has a similar organization that is dedicated to conserving of the Amsterdam’s water supply. Heineken recently develop an EchoSafe system to monitor the usage of there water. (Heineken.org) The currency of Germany is the Deutsche Mark, which prior to the Euro was the dominant currency in Europe and the standard bearer in other words the anchor. Due to Germany’s stable domestic price level and no capital controls on currency flows, the Deutsche Mark was the dominant currency in Europe. The Euro has largely replaced the Deutsche Mark and is at this point in time much stronger than the US Dollar. The Euro however, has not gained the status of international currency. It is referred to as European currency. While it has served to unify Europe, it has not been able to displace the dollar. The currency of the United States is the US Dollar. While the Euro is unarguably stronger than the US Dollar, the preferred currency worldwide still remains the dollar. The conversion from Euro to dollars is quite simply. The fact still remains that the US Dollar is still considered international money and remains the dominant office reserve asset of governments. Most countries, developing and industrial hold most of their foreign reserves in dollars. As such most invoicing internationally is done in dollars. Currency issues therefore, are not mitigating factors since invoicing is done in US dollars. Heineken does business globally, while Miller is in large part a North American entity. Both companies invoice using the US Dollar since most of the countries served by Heineken also invoice via the US Dollar, the recognized international currency. Miller primarily is sold in the US and Canada so there really is no need to invoice in another currency as Canada also invoices in US Dollars. In any case the Euro being the anchor currency of Europe, the conversions can be easily made and when doing business neither Miller nor Heineken are hampered by currency issues.   Foreign and American companies have some differences in their GAAP practices. The differences deal with the total purchase, the business combinations, and tangible and intangible assets. From the year 2004 the Heineken Company uses the standards of the Dutch GAAP. The following year (2005) the company made the transition from the Dutch GAAP to the International Financial Reporting Standards (IFRS). This change took place in order to evaluate the operating differences and financial outcome. The changes Heineken made were done to improve on the value of their tangible assets. Under the IFRS Heineken will now calculate their Tangible fixed assets at historic value less accumulated depreciation. (heinekeninternational.com). IFRS also will capitalize on goodwill which requires the price purchased and the actual value of their brands which will reduce the written off portion of their financial statement and increase profits. The Miller/Coors Company measure their income earnings from their 2007 continuing operations report. This report outlines increased charges, energy, and a raise in prices for all markets. The company decided to get rid of their pretax charges and initiate a non-cash write-down of the book value of the Molson brands sold in the U.S. (phx.corporate-ir.net). Miller/Coors outsourced their planning and transition costs along with other shared services. The Miller/Coors Company uses Tax Underlying Income as their supplement for results from operations. Finally, this discussion determines that there are many accounting practices used by both Foreign and American. During this evaluation the comparing and contrasting of regulatory environments, GAAP differences, and foreign currencies will be researched with both Heineken and Miller/Coors Brewing Companies. The above research will touch base on many different accounting criteria that are evident. References Financial Accounting: Tools for Business Decision Making (4th ed.) P. Kimmel, J. Weygandt, and D. Kieso Wiley, 2007 Millerbrewingcompany.com Heinekeninternational.com Phx.corporate-ir.net NCDAFEWater.org Heineken.org US Department of Health and Human Services. www.hhs.gov Kenen, P, “The Euro Versus the Dollar: Will There be a Struggle for Dominance'”, Panel, Annual Meeting, American Economic Association, Atlanta, Jan.4, 2002.