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This assignment revolves around "Global Capital Market: Risks and Rewards Video Concept". You are required to write a report on your understanding of the lecture video and discuss the concepts that are highlighted and mentioned in the video.
The underling themes of this lecture video are to discuss the international capital flow. The video also involves analyzing the risks presented by this capital flow to the international banking systems as well as the currency systems. The lecture video also addresses the global political systems that have been established to address the said risks. Advantages and disadvantages of financial internationalization while at the same time addressing factors such as portfolio diversification of Capital, inward and outward flow of capital, inequalities in income, as well as inter temporal trade. The lecture video also reviews some case studies of global financial catastrophes and explains their implications to the world financial status. The lecture video provides the viewer with a deeper understanding of the global financial concepts and gives one a wider knowledge regarding globalization (Journeyman Pictures, 2013)
One of the concepts discussed in the video that relates to the international accounting standards is the structure of global financial reporting. The lecture video highlights how lack of adherence to the international standards of financial reported resulted to financial catastrophes in the late 20thcentury. The video have highlighted some of the international financial crisis that have emerged such as the peso financial crisis in Mexico in 1995. The collapse of the Asian economy in 1997 is also highlighted. The International Accounting Standards (IAS) indicates that implementation of accredited standards of financial reporting promotes growth of high quality global principles of financial reporting. IAS urges that all countries across the globe to harmonize their financial reporting procedures to evade international financial crisis. Individual countries design their standards of financial reporting in such a way that it favors various individual sectors. For example, some countries may implement reporting standards that favors the creditors, tax authorities or the central government. IAS postulates that this situation is likely to result to financial crisis in the future (Greuning & Koen, 2001).
According Greuning & Koen (2001), IAS proposes that countries should shun themselves from preparing their financial statements using more than one set of available accounting standards. Adherence to more than one set of financial reporting principles is likely raise queries on the credibility of the financial reporting system. The lecture video indicates that one of the factors that could lead to international financial crises is application of inconsistent financial reporting procedures. IAS tries to solve this problem through provision of unique and inclusive set of standards that all countries across the globe should adopt. A single set financial reporting principle is understandable and hence will promote efficient operations of the economy. It would also be easy to explain the accounting standards to investors.
The lecture video highlights on the income inequalities in the international market and trade. IAS on the other hand provides a set of principles that would in the long run harmonize the income levels among countries. Adoption of IAS in every country would boost trade due to elimination of depth financial analysis. This scenario is likely to promote cross-border listing as well as international trade among countries. IAS requires that cash flows and financial movements be reported in a particular manner to eliminate pitiable financial performance. Global financial crisis expressed in the lecture video can be eliminated through adoption of quality auditing standards as proposed by IAS. Audit is a crucial part in any financial…