Barbara Thomas, in an article published in Business Law (August 1983), noted that “The inter¬ nationalization of capital markets and the dramatic increase in the foreign direct investments of multinational enterprises have increased the need for relevant, timely, and comparable infor¬ mation about the activities of business enterprises having operations in more than one nation.” However, this need will be difficult to fulfill “because the various national governments approach accounting measurements and financial disclosure matters differently. The following major items typify these differences.” 1. Consolidation practices vary widely. In some countries, for example, it is not customary to present consolidated financial statements at all. 2. In some countries there are practical links between income tax and financial reporting. 3. Foreign currency translations are measured and reported in a variety of ways. 4. In many parts of the world financial statements are required only on an annual basis. 5. A statement of cash flows is not required in some jurisdictions. 6. The standards governing the qualification of auditors and the role of the audit vary widely across countries. REQUIRED:

a. Explain why differences like those listed exist and why they make it difficult for investors operating in an international environment.

b. Briefly describe what is being done to promote greater uniformity in international account¬ ing practices.