Formy multinational corporation, I decided to choose Amazon.com, whichis located in Seattle, Washington. It was founded by Jeff Bezos hestarted the company after resigning as vice president of D.E Shaw andCo. He initially named the company Cadabra before changing it toAmazon in 1995. Being born in Seattle makes me proud to do researchon the business as I am also proud to be associated with Jeff Bezos`ssuccess at making Amazon the biggest online retailer in the world.Amazon began as a small online bookstore and later started sellingDVDs and offering MP3 as well as video streaming services. Bezos`sdecided to expand the operations of the company by targeting a biggermarket and increasing the products that the company could sell. Sincebeing founded in 1995, Amazon has grown to operate in all corners ofthe world in fact its estimated revenue of$107 Billion. Earningsuch an amount means that the online retailing company is growinghence, it has to deal with IFRS as well as the GAAP, which is widelyused by Amazon.
IFRSis defined as an accounting design that is principle-based. Theaccounting values are developed by the IASB, and they have become theworldwide standards that are used by public corporations to preparetheir monetary declarations. Since Amazon is a publicly tradedcompany, it is regulated by the IAS thus, it must ensure that itsfinancial statements are in line with those ethics. GAAP refers to acombination of principles of accounting, standards, and proceduresthat public companies employ during the process of compiling theirfinancial statements. Amazon is a publicly traded company thus, itmust observe the GAAP. During the preparation of fiscal reports forpublicly traded companies, such as Amazon, LIFO is not allowed to beused as only FIFO, but it is permitted under the IFRS. On the otherhand, under GAAP, both FIFO and LIFO are allowed. Amazon makes theuse of FIFO, in most cases, because it has operations both in theUnited States and overseas. By using FIFO, as a standard procedure ofaccounting, Amazon removes the need for adjusting financialstatements from LIFO to FIFO hence, making it work and operationfast and effective.
Isuggest that the world should have a union set of book keeping ethicsthat can be used in all corners of the earth to avoid repetition andmuch adjusting of financial statements. In my opinion, adopting acommon international standard will enable large companies toeliminate many errors and make the process more transparent, asopposed to the complexities it is in at the moment. For example,Amazon operates in hundreds of countries thus, it has millions oftransactions and observing many accounting procedures may slow theoperations of the company. Having a common accounting standard couldbe a good thing since it would mean that there is no repetition ofprocesses, which have a high likelihood of leading to wastage of tie.Tie, in business, lead to extensive wastage of resources that wouldhave otherwise been directed to useful purposes.
Surprisesduring the research
Ihad a couple of surprises when conducting the research on Amazonreport, as I just realized how big the company has grown over theyears. I was surprised to find out that Amazon has grown over theyears to surpass some giant companies, such as McDonalds, and that itis the biggest online retailing company in the world in overall andthe United States, in distinct. Such report came as astonishment tome since I never considered Amazon to have such big influence.Another surprise also came in the way accounting standards,procedures, and principles work. Earlier on, I never knew thatpublicly traded companies were more scrutinized than privatecompanies and conducting the research enabled me to come across suchinformation.
Selectionof the company
Ithink I selected the right company since Amazon is an internationalcompany and also a publicly traded company that observes both theIFRS and GAAP. I was also pleased to conduct the research sinceAmazon is headquartered in my home area of Seattle, Washington DC. Ialso enjoyed the research thoroughly because Amazon is aninternational retailing company hence a researcher has a lot to learnfrom the process. It was an interesting top notice that Amazon is runby a group of dedicated individuals who had a clear vision on whereto lead the company from earlier on. For example, the founder, JeffBezos, says that he settled on the Amazon name because he felt thatsince Amazon was the world`s largest river, having such a name wouldpush him to make the company the biggest online retailing company inthe world. Conducting research on a company with such dedicatedpeople is not only enjoyable, but also fulfilling. My research alsoenabled me learn that building a company as big as Amazon requireshard work, determination, commitment, and dedication. This isattributed to the fact that Jeff Bezos only succeeded after workinghard and also having a clear vision of where he wanted the company togo. Today, the founder of Amazon smiles knowing his dream and visioncame and was proved to be true.
StudyingInternational Financial Reporting Standards (IFRS) and GenerallyAccepted Accounting Principles (GAAP)
Theresearch also enabled me to study and understand how companies useIFRS and GAAP. After studying such accounting standards andprinciples, I am a little disturbed to learn that we have so manydifferent accounting standards around the world instead of having acommon one. Having so many accounting procedures and principles leadsto mistakes and misreporting especially, for internationalcompanies, such as Amazon. Amazon combines the accounts concepts ofIFRS and GAAP, and I am glad that such companies have commonstandards and principles that they can use. Despite this admission, Ialso support the opinion that the two accounting standards should bemerged into one accounting standard that will be used by companiesall over the world. Having a common accounting standard will meanthat the companies will not be making as many mistakes as they didbefore. Translation of currencies is also another challenge thatinternational companies such as Amazon have to go through since eachcountry has a different foreign currency. Changing the currencies tothe desired ones usually takes a lot of time and labor and leads tomore operational costs for such companies. Trading in imports andexports depends on exchange rates of the currency in question hencefor a company such as Amazon it deals with currencies from differentcountries.