Analyzing accounting policy of a company will help to understand its structure and gain working experience. It is essential to investigate the notion of publicly listed companies.
As a rule, the essence of publicly listed companies has originally formulated as a certain development of persons’ associations that ascends to the agreement of joint activity. Agreement conception had undoubted positive consequences in practice. In particular, the requirements for abolition permissive order of publicly listed companies’ origin were grounded by references to freedom of agreement.
It should be noted a publicly listed company is a totality of legal rules, techniques, receptions intended to organize and regulate life of economic enterprises. Publicly listed companies gradually adapt to the enterprise’s needs.
The whole initial period of becoming and development publicly listed company business in Europe was characterized by periodic mass bankruptcies. Bankruptcy is a process when an organization or individual is incapable to pay off with creditors. In a result, they are deprived their property by court’s decision. This property is distributed between creditors in obedience of the payment of debts set by a law (InstantShift 2012).
These events made English parliament to accept a famous Bubble – Act (law on soap-bubbles) on 11 June 1720 which forbade founding limit partnership. It prescribed penalties for the formation of companies with little or no capital (The Law Dictionary 2012).
During the first period of the development of the USA each new enterprise corporation could arise up only on a special legislative organ’s decision of the corresponding state or federal organs. Nowadays special laws regulated the organization and activity of joint-stock companies act for the majority of states.
A federal government and states’ government managed to form an effective corporate legislation which on the one hand regulates major sides of companies’ activity in detail and on the other hand is the most liberal in relation to the corporations and sets a minimum control of their activity from the side of the state.
It should be admitted the USA is a country where people appreciate such cultural values as spirit free enterprise and personal responsibility. The economy of the USA is presented by a good number of small individual enterprises that make 71%. The markets of equities are well developed in the country where the enterprises find financing sources.
The following features provided the forming of American account model having
the insignificant level of government control and giving preference to professional accountant judgment. A professional self-regulation and flexible adaptation to the economic situations characterizes the system. It is distinguished by a profitable optics and orientation on providing the potential necessities of the real investors and creditors.
The Industrial revolution in the USA and Great Britain grew more powerful each year as new inventions and manufacturing processes added to the efficiency of machines and increased productivity (International World History Project 2012). In fact, capital requirements increased with the height of companies. The growing middle class became the source of their increase. This process rendered substantial influence on development of financial account of both countries. Firstly, the amount of investors and creditors grew. Their staff became more various, many companies turned to corporate property. Secondly, the companies’ proprietors (investors) moved away from an operative management passing it to the professional hired managers.
In such situation financial accounting information becomes the major source of data about welfare of the company. In fact, shareholders began to get financial reports for efficiency control of the resources’ use from a managerial staff. Thus, these circumstances predetermined the aim of the financial reporting at the informative investors and creditors’ necessities.
The analysis of international practice allows distinguishing two basic types of account systems. The first type is the Anglo-American system. The characteristic features of this model are:
1) the accounting’s orientation on investors and creditors of enterprise;
2) the normative documents regulated the order of forming the financial report are developed by non-state organizations and carry a recommendation character;
3) the task of the informative providing of public tax organs is not qualificatory at the preparation for the financial report.
The system of accountancy is based on the GAAP (Generally Accepted Accounting Principles). GAAP cover such things as revenue recognition, balance sheet item classification and outstanding share measurements (Investopedia 2012). The basic developers of GAAP are the American Institute of Certified Public Accountants (AICPA) and the Financial Standards Board (FASB). Their regulators are admitted by the government agencies, for example, by the Securities and Exchange Commission (SEC). This structure is only one public organ setting account principles. SEC publishes two types of regulators (since 1975): the Accounting Series Releases (ASR) and the Staff Accounting Bulletons (SAB) that are based on normative documents of AICPA and FASB. Regulators of the first type contain the requirements of SEC in regard to the conduct of accountancy, presentation of open information and the audit’s rules of corporations; regulators of the second type contain recommendations to accountants on application of ASR in practice.
The other widespread model is the Continental or European. The characteristic features of the European model are:
1) a high degree of government control of accountancy practice;
2) an obligatory form of the following ratified principles of operations’ reflection;
3) an orientation of accounting control on satisfaction of informative necessities of tax and another public authorities;
4) a considerable differentiation of practice of accountancy in different countries.
The development of international connections urgently requires the standards’ unitization of accountancy conduct and drafting of the financial report. Presently, there are two approaches to the problem of unitization: harmonization and standardization.
The idea of harmonization of the different systems of accountancy will be realized within the framework of the European Union. It proclaims that there can be the model of organization of account and the standards’ system regulating it in every country.
The idea of standardization of account procedures will be realized within the framework of unitization of account that is conducted by the International Accounting Standards Committee (IASC). The idea of standardization will be realized in the development of compatible set of the standards attached to any situation and any country. Following these standards is fulfilled in a result of a voluntarily agreement of participating countries.
Lately the usage of IAS has broadened steadily. Therefore, in 1990 about 2/3 from 278 largest national corporations made accounting in accordance with IAS. More often the necessity of drafting of the financial reporting on principles of IAS arises up at the American companies. Thus, the Financial Standards Board (FASB) financed a project on authentication distinctions between national (standards of FASB) and international (LAS) standards.
Having analyzed the financial reporting environment in the USA it is necessary to trace its work in the company. I’ve chosen Sun Pharma Company for the analysis. It should be noted that it is an international pharmaceutical company. Sun Pharmaceutical Industries Limited produces special pharmaceuticals and active pharmaceutical ingredients in India. At the end of 2008, the company had 17 manufacturing plants on three continents, 8,000 employees, 2 research centers and it generated 60% of its sales in international markets ( CSRHub 2012).
One cannot but mention that the 2010-2011 was a productive year for the company. According to the research of key performing indicators the total income of the company forms 59913, the profit after tax is 19074, the R&D expenditure is 3096, reserve and surplus is 93798, net block is 25234, earning per share-basic is 17.5. Global Pharma market is expected to grow by 5-7% to reach US$ 880 billion in 2011 (SunPharma 2012).
In less than a decade, Sun has lifted itself into fifth position in the country's pharmaceuticals market. More than 70 percent of the company's sales come from India. Sun is also present in the United States (FindingUniverse 2012).
It was determined only 5 products to treat psychiatry diseases in 1983. Mergers with the Caraco Pharm Labs (Detroit, US) and Halol based plant (UKMHRA & USFDA approved) became the reason of its globalization (NaukriHub 2012).
Sun Pharma is a pharmaceutical company that offers medical facilities of high quality on reasonable prices. They conduct researches, produce ingredients, prepare medical forms and carry out delivery and marketing.
Sun Pharma is one of the most fast-growing companies out of 30 Indian leading ones. There is a strongly emphasized quality of products in Sun Pharma. All its products are produced on the strict standards of GMP. They have a modern equipment, officially approved technology and strict control.
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Sun Pharma tends to take a leading place due to its researches. For several years already 4% of its turn sent to researches; about 3, 5 million dollar is inlaid in researches. A front-rank research center SPARK is one of the greatest research centers of the country. Many talented scientists work on the synthesis of organic chemistry, pharmaceutical doses and new medical forms in SPARK. These important researches will give an opportunity to offer the best preparations that will satisfy the necessities of patients and will allow becoming one of the best in future.
According to researches of the international consulting company “Boston consulting Group” Sun Pharma takes up the 8th place among all Indian producers and the 1st place among pharmaceutical companies on the size of equity by the results of 2000.
Experts are constantly searching the conception of enterprise success. In fact, it is impossible to review all existent theories. Therefore, the search will be limited by the most clearly set forth approaches. The expert group of the American leading workers unites three important distinguishing features of successful enterprises, namely permanent changes, rapid reaction and a deep concept of quality.
Experts believe five basic principles are required for the continuous updating of the enterprise: having a long-term goal, seeing paths to its achievement, conducting comparison of necessary and present resources, having a strategic plan of the development and having the radical program of in-plant training of employees.
As for the rapid reaction a maximal capacity for reacting could be obtained through an intensive process of the collaboration both inside and outside an enterprise. Such collaboration could not be developed without a deep trust to the capabilities and reliability of a partner.
It is accepted to consider the methods of guidance people and the political situation in society the important factors of success. Experts take the Far East for a standard at the estimation this criterion. The motivated labor atmosphere, the relations arising from a period labor contract, the possibility of collaboration and making decisions on all levels, the removal of strict theses from rules and instructions lead to the forming of “we” mentality which is oriented on success.
A literate realization of rational sale strategy is one of the most important factors of successful activity of the wholesale pharmaceutical structure. It is determined by effective technology of distributive process organization which could be demonstrated on the example of a meaningful link of sale producing network, a trade activity of the subsidiary putting the idea of its optimal functioning norms in basis.
In conclusion, it should be said that the financial reporting environment is essential in the work of the company. It helps to estimate success and reveal some drawbacks for its removal and further development.