International Accounting ( Part 11 )

TRANSFER PRICING AND TAXATION INTERNATIONAL

A. Basic Concepts of International Taxation

Indonesia as a sovereign state has the right to make provisions on taxation. Function of the tax was withdrawn by the government primarily to finance government activities in order to provide public goods and services needed by all people of Indonesia. In addition, the tax also serves to regulate the behavior of citizens of the State to do or not do something.

Indonesia is also part of the international world is definitely in the running wheels of government to international relations. International relations can be cooperation in defense security, cooperation in the social, economic, cultural and other, but the discussion is limited to the export and import (International Trade Transactions) related to international tax.

Any cooperation by all countries must be agreed in advance by the parties to reach a mutual commitment contained in a treaty, not the exception agreement in the field of taxation.
Trade transactions between the two countries or countries potentially aspects of taxation, it is certainly to be regulated by the state or the international community in general to boost the economy and trade to countries such cooperation. This is important so as not to impede the flow of investment funds due to burdensome taxation Taxpayers in both countries that perform the transaction.

For that we need the international tax policy in terms of set the tax applicable in a country, assuming that each country could certainly have been set up in the tax provisions into its sovereign territory. But every country is free to regulate the taxation of the entity or a foreign national, international taxation is a form of international law, in which each state must submit to the international agreement known as the Vienna Convention.

§ International Tax Policy Objectives

Each policy would have a specific goal to be achieved, as well as international tax policy also has the objective to be achieved, namely to promote trade between countries, pushing the pace of investment in each country, the government tried to minimize the taxes that inhibit trade and investment. One attempt to minimize the burden is by doing international double taxation.

§ Principles Must Be Understood In International Taxation

Doernberg (1989) mention three elements that must be met netralis in international taxation policy:
1. Capital Export Neutrality (Domestic Market Neutrality)

Wherever we invest, the burden of taxes paid should be the same. So it makes no difference if we invest in domestic or foreign. So do not get when investing abroad, a greater tax burden because of the two countries bear the tax. This will underpin Income Tax Act Art 24 governing foreign tax credits.
2. Capital Import Neutrality (International Market Neutrality)

Investment from wherever derived, subject to the same tax. So that investors from both domestic or overseas will be subject to the same tax rate when investing in a country. It is the right of taxation of the same underlying with taxpayer of the Interior (WPDN) of the permanent establishment (PE) or Fixed Uasah Agency (BUT), which can be a branch of the company or service activities through the time-test of the regulations.
3. National Neutrality

Every state has the same tax on income. So if any foreign taxes that can not be deducted as an expense credited earnings deduction.

§ Taxation Transnational Transactions

Double taxation occurs because the clash between the claims of taxation. This is because of the principle of global taxation for the taxpayer in the country (global principle) where the income of the foreign and domestic residents are taxed by the state (state taxpayer's domicile). In addition, there are territorial taxation (source principle) for foreign taxpayers (WPLN) by the state where the income source of income that comes from that country are taxed by the source country. This makes the income is taxed twice, first by country and by source country residents Example: PT A has a branch in Japan.

Branch income is taxed in Japan by the Japanese tax authorities. Then in Indonesia's combined income with the income tax rate multiplied by the country then Indonesia's domestic law.

Clashes claim further compounded if there is a dual resident, where there are two countries together as a claim to a taxpayer subject to tax in the country which led to his global hit double taxation. For example: Mr. A work in Indonesia for more than 183 days but every Saturday and Sunday he returned to his home in Singapore. Mr. A WPDN considered by Indonesia and Singapore so as to mandatory reporting and paying taxes on global income in Indonesia and Singapore.

Division of taxing rights in relation to this, countries that do tax treaties are divided into two types. The first is the source country (source country) which is a country where income tax is the object arises. The second is the state of domicile (resident country) is the country where the subject of tax residence, domicile or resident under the provisions of the tax.

Both the source and country of residence are usually entitled to tax under its domestic law. Taxation by two tax jurisdictions against one type of income is what usually leads to double taxation that should be regulated in an agreement between the source and country of residence.

§ The concept of Double Taxation and Economic Juridical Double Taxation 

In a narrow sense, double taxation occurs in all cases considered taxation a few times on a subject and / or objects in a single tax the same tax administration. Double taxation can be caused by taxation by a single ruler (singular power) or by various (layer) single, for example, can occur in the taxation of the buildings on the resale value (land and building tax) and income (income tax on rent or profit transfer). Double taxation is often called economic double taxation (economic double taxation). 

Double taxation in a broad sense, according to the state (jurisdiction) collecting taxes, double taxation can be grouped into:
 (1) Internal (domestic).
(2) International. 

Knechtle, in the book "Basic Problems in International Fiscal Law", to name a few types of regulation include:
(1) Factual and potential,
(2) Juridical and economical,
(3) Direct and indirect. 

Taxation if the claim is actually implemented by some State jurisdictions there will be a holder of PBI factual. If the two (or more) State tax claim holders, only one country who carry the claim that there will be taxation of potential PBI. 

While the juridical regulation occurs when an income (or capital) are taxed in the hands of the same person (subject) of the same by more than one State, Economic regulation, which arises when two people (legally) differently taxed on the income (or capital ; object) the same (by more than one State). Juridical regulation, taxation by more than one State and the same legal subject. PBI occurs from indirect taxation on the same thing (the equivalent of Economic PBI). 

§ Source of International Tax Law

International taxation agreement was first coined by the League of Nations in 1921, is the basis for a model that was developed in 1928 which was then used by the countries belonging to the Organization for Economic Cooperation and Development (OECD) is originally a bilateral convention The members of the Council of the European Organization For Economic Cooperation (OEEC) with 70 member countries.

This model was later refined in mexico Model 1943 and Model London in 1946, the OECD fiscal committee then drafted a convention to solve the problems of double taxation in order to be accepted by all OECD members, later in 1963 made a final report with the title of the draft convention on double taxation income and capital which is then modified several times.

Then for Tax Treaty agreements for developing countries, made by the Economic and Social Council Of The United Nation in 1967. Then changed again in 1980 as The Group Of Experts whose members are drawn from 25 countries, comprising 10 developed and 15 developing countries. Then in 1974 and 1979. In 1979 the group of experts to review again the draft United Nations Model Convention and amended several times in 1995,1997,1998,1999, 2000 and finally 2005. Conventions is then a source of international tax law. In this world, there are two models of treaty that is often used as a reference in drafting a treaty that is the model OECD and UN models.

§ The principle of non discrimination

These principles governing equations are given by the NII tax treatment to nationals of a country and to non-citizens. A tax treaty-bound states have an obligation to provide the same tax treatment for its citizens and to those who are not citizens. This same tax treatment means that in the same conditions, those who are not citizens of a country should not bear the tax liability which is heavier than that borne by the citizens of that country. The same treatment should be given to those who are not nationals of both countries are bound to the agreement.

§ The concept of the Avoidance of Double Taxation

Taxation on an income simultaneously by applying state of residence and source countries that apply the principle cause of international double taxation (international double taxation). By investors and entrepreneurs, double taxation shall be deemed to lack the mobility to facilitate the flow of investment, business and international trade. therefore, need to be removed or granted waivers. In addition to the provisions stipulated in domestic tax, double tax relief is generally well organized in P3B.International Taxation (hereinafter in this module is called PBI) appears when there is a conflict of jurisdiction of taxation, both attached to the central government (state) and local governments (provinces, cities and counties), and are attached to each state (overlapping of tax jurisdiction in the international sphere). While people will question why these collisions to occur? The right of taxation, we realize that every sovereign state will implement the taxation of the subject and / or objects that have a fiscal linkage (fiscal allegiance) to the state tax collectors and are within its territory under the provisions of the domestic. Should the domestic provisions of the countries that tax collectors are an exception or exemption from taxes on the subject or object or domiciled outside the territory it will not happen because it might not happen PBI impact of taxation rights with other countries. or if the tax rate in the country of source of taxable income and domicile is quite low, the burden of taxation imposed on the country as a source of primary taxing rights holder (primary taxing rights) and the wear on your country of residence as a secondary taxing rights holder (secondary taxing rights) still fairly reasonable in amount by the taxpayer.

In sales tax, for example, PBI may occur if the exporting country adheres to the principle of country of origin (origin principle; taxation by the country of origin of goods and services), on the other hand, importing countries adhere to the principle of country of destination (destination principle; Taxation by country of destination or consumer countries) . PBI with respect to income tax, as has been noted earlier in this section, when the collision occurred taxing rights between the countries have economic ties, applying the principle of division of the right of taxation is not the same.

§ Definition and Purpose of the Avoidance of Double Taxation (P3B) 

In connection with the notion of double taxation (double taxation), Knechtle in his book entitled "Basic Problems in International Fiscal Law" (1979) provide a detailed discussion. Knechtle distinguish the notion of double taxation, namely:
a. By Area, Double taxation is a form of taxation and other levies more than once, which can double or more over a fiscal fact.
b. In Narrow, Double taxation occurs in all cases considered taxation a few times on a subject and / or objects in a single tax the same tax administration, which ruled out the imposition of taxes by local governments. 

Furthermore, in accordance with State taxation (jurisdiction) the tax collector, double taxation can be grouped into:
1. Internal (domestic)
2. International 

In both groups there is double taxation vertical, horizontal and diagonal (especially in the form of federal state). 

Another definition is the avoidance of double taxation agreement between the two countries bilateral agreement governing the division of taxing rights on income earned or received by the population by one or both of the countries party to the agreement (Both Constacting State). Or a tax treaty between the two countries made in order to minimize double taxation and tax evasion efforts. This agreement is used by residents of two states to determine the tax aspects arising from a transaction between them. The determination was made based on the tax aspects of the clauses contained in the relevant tax treaty according to the type of transaction at hand. 

Each tax treaty principles have more or less the same, as part of an international convention in which each country involved in a tax treaty treaty was compiled each based on models of internationally recognized treaties. In this world, there are two models of treaty that is often used as a reference in drafting a treaty that is the model OECD and UN models. 

Understanding the applicable treaty between the country with other countries, could begin by understanding the basic principles. In fact, the understanding of a tax treaty is not as easy as turning the palm of the hand. The language used, the number of clauses that pretty much, one's understanding of the fundamentals of taxation and various other causes are things that can affect these difficulties. By understanding the basic principles and general principles applicable in a treaty, a person will become easier to understand a treaty that specifically applies to a particular country. 

As a treaty, a treaty is a contract that binds a country to country in terms of tax treatment. Therefore, it always contains the clauses, chapters and verses pertaining to a particular aspect of the transaction and the particular. The articles or paragraphs (article or articles) contained in a tax treaty can basically be grouped into four major parts, namely the part that reveals the scope of a tax treaty, which regulates the minimization of double taxation, the prevention of tax evasion and the include other matters. 

All the parts that tend to be more readily understood from the various definitions, terms and understanding that is often mentioned in a tax treaty. Various definitions, terms and understanding that is the more important to understand each party specifically related to the interest in daily business practices. 

Besides the main purpose of the aforementioned P3B also have other specific goals are:
a) Avoidance of double taxation burdensome business climate;

With the P3B use tax on business profits can not be worn in both places (the source and country of residence). Operating income is taxed at the place where they are domiciled. With this provision, the business is expected to get the rule of law, since paying taxes is only charged once in your country of residence.
b) Increase of capital investment from abroad;

Taxation on investment in the form of interest on loans, dividends of planting stock, royalties from the copyright owner, if subject to high taxation, it is certain occupation or foreign nationals will consider to invest, as a result of the investment is not as expected.
c) Improvement of human resources;

With the tax exemption on student and employee training in the country where they take education and training, it can increase the number of education and training abroad, the impact will increase the sending country's human resources training and education of participants. Conversely, if income students and employees who attended training would cost the then taxed them so they do not depart out of this country will adversely affects human resource development.
d) Exchange of information in order to prevent tax evasion;

By building a good communication network between the two countries, the information about the population that does not meet the tax obligations in both countries will be detected (to intensify tax revenue). State associated with the Tax Treaty may report income of foreign residents in the state sources, such as by sending the receipt of income from state sources, revenue information should be reported by recipients of income in the country of residence, and counted again at the end of the tax year.
e) Fairness in taxation of the population between the two countries.

P3B also the same and equal taxation between the two countries, the principle of mutual benefit and not burden foreign population between the two countries in running the business.  Tax treaty countries are bound by the terms of the agreement so that should not be arbitrary in terms.

Resource :

http://keuanganhsu.blogspot.com/2010/04/konsep-dasar-pajak-internasional.html

International Accounting ( Part 10 )

FINANCIAL RISK MANAGEMENT

A. Main Components of Foreign Currency Risk

To minimize the exposure faced by the volatility of foreign exchange rates, commodity prices, interest rates and securities prices, the financial services industry offers a lot of financial hedging products, such as swaps, interest rate, and also an option. Most other financial instruments are treated as off-balance sheet item by a number of companies that conduct international financial reporting. As a result, the risks associated with using these tools is often covered up, and until now the world's accounting standard makers to be in discussions on the principles of measurement and reporting according to financial products. The material of this discussion is to discuss one of the problems of reporting and related internal control is essential.

There are several key components in the foreign currency risk, namely:
a) Accounting for risk (the risk of accounting)

The risk that the preferred accounting treatment of the transaction were not available.
b) Balance sheet hedging (hedging balance sheet)

Reduce foreign exchange exposure faced by differentiating the various assets and liabilities of foreign companies.
c) Counterparty (the opponent)

Individuals / organizations that are affected by a transaction.
d) Credit risk (credit risk)

The risk that the opponent has failed to pay its obligations.
e) Derivatives

Contractual agreements that give rise to certain rights or obligations to the value derived from other financial instrument or commodity.
f) Economic exposure (economic exposure)

Effect of changes in foreign exchange rates against the costs and revenues in the future.
g) Exposure to management (management of exposure)

Preparation of the company to minimize the impact of exchange rate changes on the income statement.
h) Foreign currency commitments (commitments to foreign currencies)

Commitment to the sale / purchase of the company in foreign currency.
i) Inflation differential (difference of inflation)

Differences in inflation rates between two countries or more.
j) The liquidity risk (liquidity risk)

Inability to trade financial instruments in a timely manner.
k) Market discontinuities (discontinuities market)

Market value changes suddenly and significantly.
l) Market risk (market risk)

The risk of loss due to unexpected changes in foreign exchange rates, commodity loans, and equity.
m) Net assets exposed position (net asset position of the potential risk)

Excess asset liability position (also referred to as a positive position).
n) Exposed to a net liability position (potential risk of a net liability position)

Excess liabilities position to assets (also referred to as a negative position).
o) The net investment (net investment)

A position of net assets or liabilities that occur in this company.
p) National number (national number)

The total principal amount stated in the contract to determine the settlement.
q) Operational hedging (hedging operations)

Kurs risk protection that focuses on variables that affect the cost income and companies in foreign currencies.
r) Options (option)

Right (not obligation) to buy or sell a financial contract with a specified price before or during a specific date in the future.
s) Of risk (regulatory risk)

The risk that the law would mean limiting the use of financial products.
t) Risk mapping (risk mapping)

Observe the temporal relationship with the market risk of financial reporting variables that affect the value of the company and analyze the possibility.
u) Structural Hedging (structural hedging)

The selection or relocation of operations to reduce overall exposure to foreign exchange company.
v) The tax risks (fiscal risk)

The risk that the absence of the desired tax treatment.
w) Type of exposure (translation exposure)

Measuring the effect of currency changes the parent company of foreign exchange for the assets, liabilities, revenues, and expenses in foreign currencies.
x) Transaction risk potential (the potential risks of the transaction)

Risk foreign exchange gains arising from the settlement or konvertion transaction in foreign currencies.
y) Value at Risk (the risk)

The risk of loss in trading portfolio companies that are caused by changes in market conditions.
z) The driver (trigger values)

Financial statement balance sheet and income statement of company values.

B. Tasks in Managing the Risks of Foreign Currency 

Risk management can increase shareholder value by identifying, controlling / managing the financial risks faced by the current. If the value of the company to match the present value of cash flows, active management of potential risks can be justified by the following reasons:
a. Exposure management helped in stabilizing the company's cash expectations of the flow 

Flow is more stable cash flows that can minimize earnings surprises, thus increasing the present value of expected cash flows. Stable income also reduces the possibility of default and bankruptcy risk, or risk that profits may not be able to cover the debt payments of the contract.
b. Management of exposure to Active allows the company to concentrate on the risk of major business 

For example in a manufacturing company, he can hedge interest rate risk and currency, so it can concentrate on the production and marketing.
c. Creditors, employees, and customers also benefit from the management of exposure

Lenders generally have a lower risk tolerance than the shareholders, thereby limiting the exposure of companies to balance the interests of shareholders and bondholders. Derivative Products also allow pension funds managed by the employer to get a higher return with an opportunity to invest in certain instruments without having to buy or sell the related real instrument. Due to losses caused by price and interest rate risk of certain transferred to the customer in the form of higher prices, limiting exposure to the management of risks faced by consumers. 

C. Defining and Calculating the Risk of Translation

Companies with significant overseas operations prepare consolidated financial statements that allow the readers of financial statements to gain a holistic understanding of the company's operations both domestically and abroad. The financial statements of foreign subsidiaries denominated in foreign currencies are restated in the currency of the parent company.

The process of re-presentation of financial information from one currency to another currency is called translation. Translation is not the same as the conversion. Conversion is the exchange of one currency to another currency physically. Translation is just a change of monetary units, for example, only the balance of the re-expressed in USD expressed in U.S. dollar equivalent value.

In addition to traditional accounting measures of risk potential translational potential of foreign exchange risk is also centered on the potential risks of the transaction. Potential risks associated with gains and losses on foreign exchange transactions arising from the settlement of transactions in foreign currencies. Transaction gains and losses have a direct impact on cash flow. Potential risks of the transaction report contains items that generally do not appear in conventional financial statements, but it raises transaction gains and losses as foreign currency forward contracts, purchase commitments and future sales and long-term lease.
Understanding Risk Management

Risk management or self-employed people working in strategic areas, each day dealing with poor road conditions. Someone could have been sure to arrive at the office on time. However, conditions on the road no one knows, for example, a tree felled by the earlier rain, or the road is closed, or other factors which may cause obstruction of the trip.

Person's ability to manage uncertainty in the streets is one form of risk management.
Similarly, the financial world. Risk is the uncertainty that will occur from each situation and the decisions we take. It's just that the consequences of that risk management is reduced or loss of our funds.

D. The risk difference of Accounting and Economic Risk 

Management accounting plays an important role in the process of risk management. They help identify market exposure, calculate the equilibrium associated with alternative risk response strategy, the company faced a potential measure of risk, noting certain hedging products and evaluate the hedging program. 

The basic framework is useful for identifying different types of potential market risk can be referred to as risk mapping. This framework begins with the observation of the relationship between the risk of triggering a variety of market value of the company and its competitors. Trigger value refers to the financial condition and operating performance of the items affecting the financial value of the company. 

Market risk including the risk of foreign exchange and interest rates, and commodity and equity price risk. Name the source of the purchase currency depreciates in value relative to the domestic currency, then this change may cause domestic competitors can sell at a lower price, referred to as the risk faced by competitive currency. Management accountant should include functions such that the probability associated with a set of output values ​​from each trigger. 

Another role played by accountants in the risk management process involves a balancing process of quantifying the risks associated with alternative management strategies. Foreign exchange risk is one of the most common form of risk and will be faced by multinational companies. 

In a world of floating exchange rate, risk management include:
a. Anticipated exchange rate movements,
b. Measurement of exchange rate risk faced by the company,
c. Design of appropriate protection strategies,
d. Preparation of internal risk management controls. 

Financial managers must have information about the possible direction, timing, and magnitude of exchange rate changes and to develop defensive measures are adequate more efficient and effective. 

E. Strategy Protection Exchange Rates And Treat Accounting Required

After identifying potential risks, the next is designing hedging strategies to reduce or even eliminate potential risks. This can be done with balance sheet hedging, operational, and contracts.
a. Balance Sheet Hedging

Protection strategy by adjusting the level and value of assets and liabilities exposed to the eye, which will reduce the possible risks facing the company. Examples of hedging methods subsidiaries located in countries that are vulnerable to devaluation is:
• Keeping the cash balance in local currency at the minimum level needed to support current operations.
• Restore income above the required amount of capital to the parent company.
• Speeding (leading ensure) the receipt of receivables in the local currency.
• The delay (slow-lagging) the payment of debt in local currency.
• Accelerate the payment of debts in foreign currencies.
• Investment of surplus cash to stock other debt in local currency which is less affected by devaluation losses.
• Investment in foreign assets with a strong currency

b. Operational Hedging

Focusing on operational hedging variables that affect the revenue and expenses in foreign currencies. Cost control is more stringent allowing a larger margin of safety against currency risk potential. Structural hedges, including the relocation of manufacturing to reduce the potential risks facing the company or changing the state is a source of raw materials and component manufacturing.
c. Hedging Contract

One form of hedging with financial instruments, whether derivative instruments and basic instruments. These products include instruments of forward contracts, futures, options, and a mixture of all three are developed. To provide greater flexibility for managers to manage the potential risks faced by foreign exchange.

F. Accounting and Control Problems Related to the Exchange Rate Risk Management Foreign Currency 

Examples of accounting and control issues related to foreign currency risk management can be seen in the following cases: 

These companies continuously create and implement new strategies to improve their cash flow to increase shareholder wealth. It does require some expansion strategy in the local market. Other strategies need to penetrate foreign markets. Foreign markets can be very different from the local market. Overseas markets create opportunities increased incidence of corporate cash flow. Number of barriers to entry into foreign markets that have been revoked or reduced, encouraging companies to expand international trade. As a result, many national companies to multinational corporations (MNCs) are defined as companies engaged in some form of international business. Control of the company's cash management performance measurement include the exchange of all the risks, hedging is used to identify, and reporting the results of the hedge. Evaluation system also includes documentation on how and to what extent a company helping other business units within the organization. 

In many organizations, foreign exchange risk management is centralized at corporate headquarters. This allows the managers of subsidiaries to concentrate on its core business. However, when comparing the actual and the expected results, the evaluation system must have a reference that the company used the success of risk protection.

International Accounting ( Part 9 )

MANAGEMENT PLANNING AND CONTROL

A. Four Dimensions In Business Modeling

§ Model

The model is a simplification (abstraction) of something. The model represents the number of objects or activities referred to the entity (entity). Managers use models to solve problems.

The types of models. There are four basic models, namely:
1. Physical Model

Is a depiction of an entity in the form of three dimensions. Physical models used in the world shopping center business includes mockups, or prototypes of new models. Physical models to help a cause that can not be fulfilled by the real object. For example shopping center investors and auto makers can make some changes to be cheaper through the design of the physical model were compared with the final product.
2. Narrative Model

Describe the entity either orally or in writing. All business communications is a model of narrative, so the model of narrative is the most popular models. This model is often used by managers, but rarely recognized as a model.
3. Graph Model

Describe entities with line number, symbol or shape. Graphical models used in business to communicate information. Many company's annual report to shareholders contains color graphics to convey the company's financial condition. Graphs are also used to communicate information to managers.

Graph model is also used in the design of information systems. Many tools used by programmers and system analysis is the chart. An example flow chart (flowchart) and data flow diagrams (data flow diagram - DFD).
4. Mathematical Model

Most of the attention in the modeling business (business modeling) is currently focused on mathematical models. All mathematical formula or equation is a mathematical model. Mathematical models used by business managers are generally no more complicated than the models commonly used in mathematics.

Excellence is the accuracy of mathematical models in explaining the relationship between different parts of an object and provides predictive capability. Mathematics can handle relationships more dimension than the model of which only two dimention graphs or three-dimensional physical models. For mathematicians and managers are aware of the complexity of business systems, the ability of multidimensional mathematical models are valuable capital.

Usefulness of the four basic types of models have their uses as follows:
a. Facilitate understanding (Comprehension)
A model would be simpler than the entity. Entity is more easily understood if the elements and presented in a simple relationship. In the physical model can only describe the shape of the object to be studied. In the model of narrative, the narrative can be processed into an overview. In the model graphs, charts can only show the main relationships, and on mathematical models, mathematical equations contain only the primary elements. But in any case, made an attempt to present a model in a simple form. After the simple models are understood, the model can be gradually made more complex so it can more accurately describe the entity. In any case, the model still only describe the entity and is never exactly the same as the entity.
b. Simplify Communications

After solving the problem (problem sorver) understand the entity, meaning it often needs to be communicated to others. Perhaps the analysis of the system must communicate with the manager or programmer. Or maybe a manager must communicate with other team of team problem-solver.
The fourth type of model can communicate information quickly and accurately to people who know the meaning of various shapes, words, graphs, and mathematical equations.
c. Estimating Future

Accuracy in describing the entities making mathematical models can provide capabilities that are not shared by other types of models. Mathematical models can predict what will happen in the future, but not one hundred per cent accurate. Because more data is entered into the model is usually based upon various assumptions, the manager must use judgment and intuition to evaluate the model.

§ General System Model 

The approach taken in this case is based on the use of computers in business, include all information systems in all types of organizations, and the means used is a general systems model of the company.
Physical Systems
a) Material Flow 

Input materials received from suppliers of raw materials and component assemblies. This material is stored in storage until needed in the transformation process. Then, the material is included in the manufacturing activity. At the end of the transformation process, the material is now in its finished form, kept in storage until shipped to customers.
In manufacturing companies, two functional areas involved in the material flow. Manufacturing functions to change raw materials into finished goods, and the marketing function is to distribute the finished products to customers. Both of these fields must work together to facilitate the flow of material.
b) Personnel Flow 

Personnel input from the environment. Prospective employees from the local community and possibly from rival unions. Personnel input is normally processed by the human resources function, and then assigned to various functional areas. When in the field, the employees involved in the process of transformation, either directly or indirectly. Human resources function also processes employee dismissal (resignation, severance, or retirement), and these resources are returned to the environment.
c) Flow Machine 

Machines obtained from the supplier, and is usually in the company for long-term (3-20 years or more). However, eventually all the machines are returned to the environment in the form of trade up to new models, or as scrap. The machines are used continuously, rarely kept away. Due to the specific sources of supply, without storage, and disposal pathways special well, so the current machine is a physical resource of the most direct. However, flow control machines scattered across various functional areas of the machine.
d) Money Flow 

The money is mainly obtained from the owners, who provide investment capital, and from corporate customers who provide the sales revenue. Other sources include financial institutions, which provide loans and interest on an investment, as well as from of government, which provide money in loans and aid. Responsibility for controlling the flow of money just to be on the finance function. 

Flow of money through companies rarely involve money in physical form. In contrast, the flow is something that represents money (check, credit card slip, transactions in electronic form). Only at the retail level of cash actually changes hands. 

Because the flow of money to connect the company with financial institutions, customers, suppliers, shareholders, employees, and government.
Conceptual System 

Most of the open system can control its own operations. Control is achieved by using a circle contained in the system. The circle is called a feedback loop, which provides a pathway for signals from the system to the control mechanism and vice versa. Control mechanism is a kind of tool that uses a feedback signal to evaluate the performance of the system and determine whether corrective action needs to be done.
1. Open Circle System 

Is a loop system without feedback or control mechanism. Figure 6.1. show open systems and open loop system at the same time. Only a few companies that use business concept. These companies are using open systems, but the feedback and control mecanise not working properly. The company started on a path and never change direction. If the company loses control, nothing is done to control the balance. The result is the destruction of the system (bankruptcy).
2. Closed circle systems 

Is a system that has a feedback loop and control mechanisms. The system can control its output by making adjustments in its input.
Management Control 

Feedback loop consisting of the information. Management uses the information as a basis for making changes in the physical system, (see Figure 6.3). The information describes the system output. Many types of management reports include information (such as production volume, cost distribution, and sales analysis). Because the company's main goal is to produce some kind of output, the output size is an integral part of the control system.
Information Processing 

The trip information is not always straight to the manager of the physical system. Most managers are far away from physical activity. This is especially true in high-level managers. The manager has to obtain information from a system or procedure that generates information from data collected. Mechanisms that produce the information called Information Processing.
Information Dimensions 

When managers determine which output should be provided information processing, they considered four basic dimensions of information. These dimensions contribute to the value of information. 

The dimensions of the information in question, namely:
1. Relevance

Related to the problems that occur. Managers must be able to choose the required information without having to read all the information about other subjects.
2. Accuracy

Ideally, all information must be accurate, but the increased accuracy of the system adds to the cost. For this reason, managers are forced to accept less than perfect accuracy. The case of payroll applications, billing and accounts receivable, require 100% accuracy.
3. Timeliness

Information should be available to solve the problem before crisis situation gets out of control or the opportunity disappeared. Managers must be able to obtain information that describes what is happening today, in addition to what has happened in the past.
4. Completeness

Managers must be able to obtain information that presents a complete picture of a problem or solution. However, system design managers should not drown in a sea of ​​information. The term information overload (information overload) acknowledges the dangers of too much information. Managers must be able to determine the amount of detail required.
Standard

So that managers can exercise control over part of its responsibility, there must be two elements: there must be information that describes what is being achieved in that section, and there should be a standard of work that reflects what you have achieved that section.

We can define for as a whole to be achieved the target system. A system must have at least one goal, but it can also be a number of purposes. Objectives are usually stated in general. So that managers can control the system, they need something more specific than the destination, which can be achieved through standards. Standard work is an acceptable size, ideally expressed in specific terms.

Managers use the standard to control the physical system by comparing the actual performance.
Management by exception

Standard output is combined with information from the processing of information, allowing managers to implement management by exception. Management by exception is a style which is followed by managers, the managers involved in the activity only if the activity that deviates from acceptable performance. In order for managers to practice management by exception, should be set standards in the form of upper and lower limits of acceptable performance.

Management by exception provides three basic benefits, namely:
a) Managers do not waste time to monitor the activities that take place normally.
b) Because fewer decisions are made, each decision to obtain a more thorough attention.
c) Attention is focused on opportunities, and on things that do not run properly.

But there are also a number of obstacles that must be known, namely:
1) Some specific types of business performance is not easily determined by the quantity so that the standard can not be determined.
2) An information system that monitors performance accurately is needed.
3) Attention is directed to the standard must continue to maintain standards at the right level.
4) Managers should not be passive and just wait for the performance limits through. Managers must act to solve a problem before the situation gets out of control.

Management by exception is the basic capabilities provided by CBIS. By allowing the CBIS bear some responsibility to monitor the physical system, the manager can be used effectively.
Critical Success Factors

Management concept is the same as management by exception is called the critical success factors (critical success factors - CSF). CSF is one of the company's activities that impact on the company's ability to achieve its goals. Companies usually have some CSF. For example in the automotive industry, which has been identified CSF is a stylish, efficient dealer network, and strict control of manufacturing costs. Information systems allow managers to follow the CSF to report information about the CSF.

CSF concept with management by exception in this case focused on the operation of the entire company. In addition, the two concepts differ in terms of CSF is relatively stable, while the elements of the exception management by exception can change from one period to the next.
The decision flow

Other modifications to the general model is needed to reflect how management decisions can alter the physical system. Just as managers need to collect data from all three elements in the physical system (input, processing, and output). Managers should also be able to make changes to the performance of the three elements.
Environment

Final form of the general model reveals that the flow of resources into the company of the environment and of the company back into the environment.

§ Use of the General System Model

Based on previous descriptions have been clear about the form of the general system model, which can be applied to other types of organizations that exist at present, although the need for some modifications. For example, the use of general systems model of the organization that produces products and services.
1. Supermarket

All the physical resources to flow through the physical system a supermarket. The main stream is material, namely food and other goods are sold. Current personnel consist of a store manager, cashier, stock clerk, and other persons employed for a long time and finally stopped. A small number of machines used, the bar code reader at the checkout.

There are also machines behind the scenes such as computers, calculators and telephones. Other tools include refrigerators, display boxes, and shelves to put the merchandise to be sold. Flow of money into the supermarket provided by the customer, and the outflow is mainly in the form of payment to suppliers, employees and owners.

The transformation process includes opening the carton and arrange merchandise on the shelves. In other words are all activities that make the product ready for sale are easy and interesting.

Management elements in the conceptual system composed of store managers and assistant managers. Information processor is a computer store, which control the bar code reader and provide prices for various goods. The computer also sends data to the headquarters of the goods to be ordered, providing sales statistics, and so forth.

Supermarket performance standards set jointly by the head office and store management. Standards in the form of sales quotas and operating budget provides managers with guidance on the level of performance to be achieved. Managers use the observations and processing of information to monitor actual performance and compare it with the standard.

Manager receives a report that shows where goods are sold, and what does not. Managers responded to the report by taking actions such as adjusting the number of orders, rearranging shelves, a sale, as well as adding signs and shelf promotion. The report can also indicate the hours and days in which the sale is very high and very low. Such information is useful for hiring and scheduling employees in order to provide adequate services for customers.

Supermarket managers use the information from the processing of information, plus the existing standards, as a basis for making some changes in the physical system so that supermarkets can continue to work towards that goal.
2. Office of the Attorney

Usually consists of a small number of professionals who have been specially trained and authorized to carry out their duties. Their task is more mental than physical stress activity. Very little material flow, especially in the form of recording equipment (eg paper and pencil).

Every law firm is a physical system under control. In the large office, control carried out by some so-called partners. The main responsibilities of the partners is to ensure that the company achieve its goals.

Standard performance is most likely not as detailed as standard in the supermarket. Attorney's office may not attempt to handle so many cases or win a certain percentage of the trial. However, we assume the purpose of profit, because the partners understand that profit is the key to the continuity of operations.

The process of transformation is to change the client with a client's legal issues are unresolved legal issues. This is done by lawyers, which is an important resource for the company.

Even though formal standards may not exist, the partners know the level of performance required the company to succeed. If the standard is not achieved intuitively, made a decision to change the physical system. For example, if too few legal issues that turned into a solution (less in most cases), can be hired additional lawyers, attorneys now have replaceable, students can work part time for the conduct of research libraries, and so on. General systems model provides a structure for the basic elements of each of the offices of lawyers.

 B. The concept of Cost Differences Between Standard and Kaizen

§ The concept of Kaizen and Standard Costs 

Determining the standard cost system tries to minimize the variance between budgeted costs with actual costs. Kaizen Costing stressed to do what is necessary to achieve the desired levels of performance in a competitive market conditions. 

KAIZEN derived from Japanese, meaning 'perfection' or 'improvement' involving continuous everyone, whether top management, managers and all employees, because of KAIZEN is the responsibility of each individual / person. 

KAIZEN is divided into 3 segments, depending on the needs of each company, namely:
1) KAIZEN management oriented, focusing on strategic issues and the most important logistics and provide momentum for the pursuit of progress and moral.
2) KAIZEN oriented group, carried out by a quality control group, the group Jinshu Kansi / volunteer management uses statistical tools to solve problems, analyze, implement and establish standards / procedures.
3) KAIZEN oriented individual, manifested in the form of advice, where one has to work smarter if they do not want to work hard. 

Some important points in the process of implementing KAIZEN namely:
a. 3M concepts (Muda, Mura, and Muri) in Japanese terms. 

The concept was created to reduce fatigue, improve quality, shorten time and reduce or efsiensi costs. Young is defined as reducing waste, reducing the difference is defined as Mura and Muri interpreted as reducing tension.
b. Move 5S (Seiri, Seiton, Seiso, Seiketsu and Shitsuke) 

Seiri means to clean up the workplace. Seiton means saving regularly. Seiso means maintaining the workplace in order to keep it clean. Seiketsu means of personal hygiene. Seiketsu means of discipline, always comply with workplace procedures.
c. The concept of PDCA in KAIZEN 

Any business activity that we do need to be done with proper procedures in order to achieve the goals that we hope. So PDCA (Plan, Do, Check and Action) must be done continuously.
d. The concept of 5W + 1H 

One of the tools to run the mindset of PDCA in KAIZEN activity is to ask the basic question of technique 5W + 1H (What, Who, Why, Where, When and How).
After successfully applying foreign technology, and produce goods on a large scale and quality control as well as possible, the Japanese industry was focused on perfecting the system of work in the field of production technology. This means they have the ability to meet / follow the wishes of the customer and market needs in a short time. The key is to mechanization, automation, and system robotisation interrelated. 

Again KAIZEN is everyone's responsibility. KAIZEN concept is very important to explain the difference between the views of Japanese and Western views of the management. The most fundamental difference is the concept of "KAIZEN Japanese and process-oriented way of thinking, while the Western-oriented way of work". KAIZEN is just one special characteristic of Japanese companies manufacturing in, because there are many other concepts that are always popping up, because Jepang always thought that not a day has passed without any action should be improvements in the company. 

C. Measuring Investment Returns of State Estimates 

§ Net Present Value (NPV) 

Net present value is the current difference between the present value of benefits (benefits) to the current present value cost (cost). NPV shows the net benefit received from a business over the life of the business at a certain discount rate.
If:
NPV> 0 (zero) → enterprises / project feasible (feasible) to be implemented
NPV <0 (zero) → business / project) / py is not feasible (feasible) to be implemented
NPV = 0 (zero) → business / project in a state where the BEP
TR = TC in the form of present value. 

The data necessary to calculate the NPV of the estimated investment costs, operating costs, and maintenance as well as estimates of project benefits
planned. 

From the formula above, a conclusion can be drawn:
• The higher the income, the higher the NPV.
• The early arrival of income, the higher the NPV.
• The higher the discount rate, the lower the NPV. 

If the NPV of a project is positive, this means that the project is expected to increase corporate value by the number of positive than the calculated NPV of the investment and that investment is also expected to yield a higher profit rate than the desired level of profit. 

To compare the two projects will be selected which can be done by comparing the value of the project NPV, where NPV of a larger project that will be taken. 

As for the present value (PV) is useful to calculate the present value of a uniform series of payments in the future of some single number that has been equated averaged at the end of the period at an interest rate.
The formula: PV = Σni CFI = 1 / (1 r) m SV / (1 r) n 

Where: PV = Present value
CF = Cash Flow
n = period of time in the n
m = the time period
r = interest rate
Sv = salvage value

§ Internal Rate Of Return (IRR) 

IRR is the interest rate that will make the present value of expected proceeds to be received (PV of future proceeds) equals the sum present value of capital expenditure (PV of capital outlays). Basically the "internal rate of return" must be sought by way of "Trial and error" with the department of trial and error. The determination of fare change is done by the method of trial and error in the following way:
§ Finding the cash value of net cash flow return on rate selected at any rate above or under expected investment returns.
§ The tariff change is to get a real return rates. 

IRR is an indicator of the efficiency of an investment, as opposed to NPV, which indicates value or an amount of money. IRR is the effective annual compounded return rate which can be generated from an investment or the yield of an investment. A project / investment can be done if the rate of return return greater than that received when we make investments in other places (banks, bonds). 

To determine the magnitude of the IRR must be calculated first and NPV2 NPV1 by trial and error. If NPV1 discount factor is positive then the second must be greater than the SOCC, and vice versa. 

From these experiments it was between the IRR and NPV NPV is positive, negative, namely the NPV = 0.
Comparison of NPV and IRR. If there is an independent project that the NPV and IRR will always give the same recommendation to accept or reject the proposed project, but if there is a mutually exclusive projects, NPV and IRR does not always give the same recommendation. 

This ni caused by two conditions:
§ The size of different projects, one larger than the others.
§ The difference in time. The timing of the cash flow from two different projects. One project cash flow occurred in the early years of the project while others aksnya flow occurred in recent years.
The point is to projects that are mutually exclusive, then the right choice is the highest NPV projects.
If oppurtunity Cost

§ Social Capital (SOCC) 

Social costs borne by society, usually used as the discount factor. SOCC is highly related to the premises IRR, do the following:
If
IRR> SOCC is said to be feasible project
IRR = SOCC means the project on BEP
IRR <SOCC said that the project is not feasible. 

D. The calculation process of Multinational Cost of Capital 

Capital costs (cost of capital) have a large effect on the value of a multinational corporation (MNC). To fund its activities, MNC using the capital structure (is the proportion between debt and equity) that can minimize the cost of capital, and thereby maximize the value of MNC.


  § Cost of Capital 

Capital of an enterprise consisting of equity and debt. The cost of retained earnings is opurtunity costs. The cost of new common stock also represents a opportunity cost. These costs exceed the cost of retained earnings because it contains loads associated with the issuance of new shares. The cost of corporate debt is the interest to be borne by the company. The Company attempts to use a capital structure that will minimize their cost of capital. Cost of capital weighted average (which can be measured is symbolized by the equation: 

Where D is the amount of corporate debt, Kd is the cost of debt before taxes, t is the corporate tax rate, E is the amount of corporate equity, and to the cost of equity. The advantage of using debt because interest payments are tax deductible. However, the greater use of debt increases the likelihood of bankruptcy.Where D is the amount of corporate debt, Kd is the cost of debt before taxes, t is the corporate tax rate, E is the amount of corporate equity, and to the cost of equity. The advantage of using debt because interest payments are tax deductible. However, the greater use of debt increases the likelihood of bankruptcy.

§ Cost of Capital of Multinational Companies

Special characteristics that distinguish it from multinationals with purely domestic firms, namely:

1. Company Size

MNC which often borrow substantial amounts may obtain preferential treatment of creditors, thereby reducing their capital costs. In addition, the capitalization of the stock or the issuance of those bonds are relatively large to enable them to lower the cost of emissions as a percentage of the emissions. It should be remembered that this is solely due to the size of the MNC, not by the level of MNC involvement in international business. Namely, any purely domestic companies are treated the same if the size is large. But the company's growth could be restrained if it is not going to expand into international markets. Because multinational companies can achieve growth easily than purely domestic firms, they may be able to achieve the size necessary to achieve preferential treatment of creditors.

2. Access to the International Capital Market

Multinational companies can get funding from international capital markets. Because the cost of funding varies between markets, MNC access to the international capital markets enabled it to obtain funds with lower costs than purely domestic firms. In addition, the company can get the children of local funds at a cheaper cost than the parent company itself, if the interest rates prevailing in the country is relatively low room.Form of such financing can lower the cost of capital, and not always raise the MNC's exposure to exchange rate risk, because the revenue generated by the subsidiary is likely to be denominated in the same currency exchange of the loan. In this case, the subsidiary does not have to rely on the financing needs of the parent, although it requires a number of managerial assistance from the parent

3. International Diversification

Cost of capital of a company closely linked to the probability of bankruptcy. If a company's cash inflows derived from various sources around the world, cash flows may be more stable. This reasoning is based on the assumption that total sales will not be significantly affected by one single economy. As far as individual countries independently of each other, the net cash flows from a portfolio consisting of its subsidiaries will contain a lower variability, which can reduce the probability of bankruptcy and thereby lower the cost of capital

4. Against Foreign Exchange Risk Exposure

Cash flow of a multi-national companies may be more volatile than cash flows of existing domestic firms in the same industry, if cash flow is very ekpos to exchange rate risk. Companies are more exposed to fluctuations in exchange rates will usually have a distribution of cash flow is more turbulent periods which shall come. Because of the possibility of bankruptcy is higher if the future cash flows more uncertain,

Exposure to exchange rate could lead to higher capital costs

5. Against the Country Risk Exposure

A multinational company establish subsidiaries abroad to face the possibility of confiscation of the assets of the company by the government AAK guests. If the assets were confiscated and reasonable compensation is not provided, the probability of bankruptcy increases MNC. The higher the MNC assets are invested abroad the higher the probability of bankruptcy (and the higher the cost of capital), ceteris paribus.

6. The forms of Country Risk

Not as dangerous as the confiscation of assets, although it affects the cash flows of multinational companies, such as changes in tax laws by the government guests, and so forth. For example, Exxon Corporation has extensive experience in assessing the feasibility and potential overseas. If Exxon saw no sign of the alternation of government or tax policy in a country, Exxon will add a premium to the required rate of return of project-related. In general, the first three factors have a positive relationship with capital costs of multinational corporations, while exchange rate risk and country risk has a negative relationship.

§ Comparison of Cost of Capital Using the CAPM 

To assess how the desired rate of return is different from the multinational companies that desired rate of return by purely domestic firms, capital asset pricing model (CAPM) can be applied. Return to CAPM defines the desired level (to) from the stock as: 

Where:
Rf = risk-free rate of return
km = rate of return on the market
B = Beta of the stock CAPM implies that the desired rate of return of shares of a company is a positive function of:
(1) risk-free interest rate,
(2) rate of return on the market, and
(3) Beta of the stock 

Beta represents the sensitivity of stock returns against market returns (stock price index is usually used as a substitute for market returns). A multinational company does not have any control on the risk-free interest rate or market rate of return, but can affect the beta. 

Multinational companies are able to increase sales volume overseas will be able to lower the beta of the shares, thus, reducing the rate of return desired by investors. So the cost of capital will decrease if the multinational companies to increase sales volume. Supporters argued that the CAPM beta of the project can use to determine required rate of return of the project. Beta of the project represents the sensitivity of cash flows (which produced the project) to market conditions. A project that isolated from market conditions will have a low beta. For a highly diversified multinational corporation, which receives the cash flow generated by several projects, each project contains two types of risk:
(1) non-volatility of cash flows for the company's unique systematic, and
(2) Risk systematically 

CAPM theory states that non-systematic risk of the project can be ignored, because it can be diversified. However, systematic risk can not be diversified, because it affects all projects in the same way. The lower the beta of the project, the lower the systematic risk of the project, and the lower the required return of such a project. If a multinational project to show a lower beta than a purely domestic enterprise project, then the required return of MNC project should be lower. If the required return is low, meaning the cost of capital is also low. The theory of capital asset pricing (CAP) thus supporting the assumption that the capital cost of the multinational companies are generally lower than the cost of capital of domestic companies, for reasons that have been presented. Even so, it must be stressed here that the non-systematic risk of the project remains as relevant by a number of multinational companies. And if the risk is also taken into account in assessing the risks of the project, the required return of MNC projects are not necessarily lower than the desired rate of return on projects purely domestic firms. 

In fact, a large-scale projects in developing countries where political conditions are very unstable and has a higher country risk would be considered too risky by many multinational companies, even though the cash flow to be generated by this project have no correlation with the U.S. market. This implies that multinational companies may be looking at non-systematic risk as an important factor when determining the required return from overseas projects. If it is assumed that markets are segmented from each other, can be justified to use the U.S. market as measured beta of U.S.

MNC's projects. If U.S. investors to invest some of those in the U.S., their investments are systematically influenced by the U.S. market. Multinational companies are implementing the project had a low beta-beta may be able to lower their own (ie, the sensitivity of their stock price to the market index). Companies that have a low beta will be more attractive to U.S. investors because it offers many benefits of diversification. Because of increasingly integrated markets from time to time, one might argue that the global market is a market that is more permanent than the U.S. market for U.S. multinationals. That is, if investors buy stock from many countries, the value of their investment will be strongly influenced by global market conditions, not just the U.S. market conditions. 

Consequently, they prefer to invest in companies that have a low sensitivity to global market conditions to get more benefits of diversification. Multinational companies are able to implement projects that somewhat insulated from global market conditions will be considered as a more attractive investment vehicle for investors. Although increasingly integrated markets, U.S. investors still tend to focus on U.S. stocks, probably due to low transaction costs and the cost of information collection. Thus, their investments are systematically influenced by U.S. market conditions; this made them very concerned about the factors that affect the U.S. market. 

In conclusion, we can not state with certainty that multinational companies will have lower capital costs than purely domestic firms that operate in the same industry. However, we can use this discussion to understand why a multinational corporation trying to take full advantage of certain aspects which will lower the cost of capital and vice versa, to minimize exposure to those aspects that will raise the cost of capital. 

Planning and management control is critical for the company, in this multinational company. However, the reduction in national trade barriers continuously, a floating currency, sovereign risk, restrictions on sending funds across national borders, differences in national tax systems, differences in the level of interest rates and commodity prices and the effect of changing equity to assets, earnings , and the cost of capital is a variable that complicates management decisions. Global competition and rapid dissemination of information to support the limited national differences in management accounting practices. Additional pressures include, among others, changes in markets and technologies, the growth of privatization, incentive costs, and performance as well as coordination of global operations through joint ventures and other strategic links. 

Company in the conduct of management control requires a planning tool that can identify the relevant factors in the future, scanning the external and internal environment. The tool helps companies identify opportunities and challenges. One such tool is the WOTS-UP analysis regarding the strengths and weaknesses of the company relating to the company's operating environment. Accountants can also help corporate planners to obtain useful data in strategic planning decisions. 

Then, the decision to invest abroad is a very important element in the global strategy of a multinational company. Investment risk, followed by the foreign environment, complex and constantly changing. Formal planning is a must and is generally performed in a capital budgeting framework that compares the benefits and costs of the proposed investment. Differences in tax law, accounting system, the rate of inflation, the risk of nationalization, currency framework, market segmentation, restrictions on the transfer of retained earnings, and differences in language and culture adds to the complexity of elements that are rarely found in domestic environments. 

Adaptation by multinational companies for investment planning models have traditionally been carried out in three areas of measurement:
a) Determine the relevant returns for multinational investment. 

A manager must determine the relevant rate of return on foreign investment opportunities analisis remedy. However, the relevant rate of return is a matter of point of view of the project or the parent company abroad. Returns from these two points of view can differ significantly. Financial managers need to meet multiple objectives by providing a response to investor groups and non investor in the organization and the environment. If a foreign investment does not promise a return on risk adjusted returns that value is obtained from local competitors, the parent company's shareholders would be better to invest directly in local companies.
b) Measuring cash flow expectations. 

For managers of multinational companies, measuring the expected cash flows of a foreign investment is quite a challenge. Revenue estimates are based on projected sales and billing experience antipasti. Operations and local tax burden equally predictable. This process should also consider the impact of changes and fluctuations of the currency on expectations of return on foreign currency.
c) Calculate the cost of multinational capital. 

For a control system for a multinational company to function properly, the system typically used by many multinational companies to control its foreign operations in many respects much the same as those used domestically. Parts of the system are generally shipped out include financial control and budget as well as the tendency to apply the same standard that was developed to evaluate the domestic operations. 

Once the strategic goals and capital budgets are created, the management focus on short-term planning. Short-term planning includes making the operating budget or profit plan when needed in the organization. Plan earnings are the basis for forecasting cash management, operating decisions, and management compensation schemes. 

Plan of the company income statements of foreign affiliates is first converted according to accounting principles adopted in the parent company's country of origin and translated from local currencies into the currency of the parent. 

E. Problems and Design Complexity in Finance and Control Systems Information on Multinational Enterprises 

Clear distance is a hassle. Caused by geography, formal information communication generally replace the personal contact between the local operations manager with office management. 

Three global information technology strategy, each of which is associated with certain types of multinational organizations. Achieved success depends on the suitability of the design of systems with corporate strategy:
a) The spread of low to high centralization. Used by smaller organizations with limited international business operations and information systems need to dominate the domestic.
b) High with a spread of low centralization. Local subsidiary is given a significant influence on the development of strategies relating to technology and information systems Himself.
c) High with a spread of high centralization. Following the global information technology strategy execution locally by global companies with strategic alliances throughout the world. Information system is designed to reflect the needs of the company adapted to local conditions. 

Management Accountant to prepare some information for the management of companies, ranging from data collection to reporting estimates of different types of liquidity and operational expenditure. For each group of data submitted by the company management should determine the relevant time period for the report, the level of accuracy required, the frequency of reporting and the costs and benefits of depreciation and timely delivery. 

Here also the environmental factors that influence the use of information generated translation. Reports from overseas operations of multinational companies are generally translated into U.S. dollar equivalent value of the manager's office in the U.S. to evaluate their investment in dollars.

F. Exchange Rate Variance 

Three rates of exchange may be used when preparing the draft operating budget at the beginning of the period:
a) The exchange rate when the budget prepared place.
b) The exchange rate is expected to apply at the end of budget period (projection rate).
c) The exchange rate at the end of the period when the budget be adjusted if changes in the exchange rate (closing rate).

G. Special difficulties in Designing and Implementing Performance Evaluation System Multinationals 

Evaluation of performance on certain multinational companies are classified into three levels, namely:
1) Levels of Leadership (Director and above),
2) Supervisors and above, and
3) Employees of low (blue). In the evaluation of the directors to the top, the assessment is directed "leadership framework" which includes 13 behaviors were classified into 4 groups: 

a. Inspire people consisting of:
§ Leading the

Is the ability of civil servants and make them confident in doing something so That They could create the appearance was consistent with the principles of management and leadership with the translation as follows: Related to keep all relevant information and community, increase effectiveness of work teams and team principal to success.
§ Developing people

Is to help employees to identify needs for the successful development needs, encourage employees to learn to provide suitable support. With the translation as follows: Provide a detailed command ensures that the command is understood, and Cleary look and create a positive environment for long-term development.
§ Practice what you preach

Is it to be consistent with the principles and values ​​Realizing, including "the passage of communication" even in difficult times.

b. Opening up, consisting of:
§ Knowing yourself

Is the ability to precisely identify and understand the power of yourself and fix it as well as applied and implemented in effect, order was understood in a person's effectiveness in the organization. And have extensive self-care and deep. Act as a constant (stable) on the influence of their power to correct and compensate for weaknesses.
§ Insight

Is the ability to identify relationships between facts, ideas and the situation was not clear and collecting it to solve problems that require priority, clarify and explain the complex situation that has been given / created opportunity.
§ Courage

Associated with the capacity and confidence of employees in their opinion, and allowed to make decisions or choices, along with concerns Evaluating the risks and responsibilities in dealing with critical situations and challenges.
§ Curiosity

An employee openly curiosity to learn more about the environment by asking questions to think or do research It appears simple, broad and constant.
§ Service orientation

Is the desire to help or serve the customer with an understanding of customer expectations and needs, providing quality services that are long lasting and mutually beneficial as well as a long-term perspective on the merits.

c. Calls to the other, consisting of:
§ Proactive cooperation

Whether working with others through a commitment to Achieve object groups, understand their needs and other targets and adapting own views and the views, if appropriate behavior through personal contribution to effective teamwork.
§ Impact: Reassure and Others

Is convinced, directly or indirectly to obtain commitment to the project idea or action that the Organization of interest through the use of a lot of convincing arguments, generate interest in others by using the influence of an integrated strategy.

d. Add value, comprising:
§ The focus

Ambition is to meet the target performance / quality standards and work continuously to Obtain Suitable methods of process improvement, motivation to Achieve the target to increase employment and maximize employment in the long run.
§ Initiative

Make the employee is to act proactively (to act and think in simple terms) so that the initiative was not just reacted to the situation, but also anticipating for a long time and do it well.
§ Innovation / Renovation

Display behavior to receive the 'status quo' challenges in improving the control and new ideas so that there is a change up and running efficiently.

H. Overcome the effect of inflation and exchange rate fluctuations against the Performance Measurement

Multinationals

For multinational companies, foreign currency fluctuation level of uncertainty resulting from the company's operations in the international arena. Eye risk management refers to enterprise risk management transactions, economic, and translation. Transaction risk refers to the likelihood that cash transactions in the future will be influenced by changes in exchange rates. Economic risk refers to the possibility that the present value of cash flow company in the future will be influenced by exchange rate fluctuations.

One way to overcome problems of economic risk and the risk of the transaction is to hedge (hedging). Swap contracts require the buyer before a certain currency with a certain exchange rate (forward rate) at a predetermined date in the future. In the face translational risk, management can give a report in dollar-denominated and local multinational management can know the true state of the local divisions and the impact of foreign currency translation.

Multinational companies use a system of decentralized Because It Gives advantage to the country of origin and distribution of foreign divisions. These advantages include:
1) local managers are able to produce better decisions through the use of local information.
2) local managers can provide more timely responses to changing circumstances.
3) center manager is not possible to understand all of products and markets.
4) Train and Motivate local managers to make decisions daily operations so that top management can focus was more on long-term problems.

Performance measurement in multinational companies should separate the evaluation of a division manager with evaluation of this division. Managers should be evaluated based on revenue and costs incurred. Once the manager is evaluated, a subsidiary of the financial statements can be tailored to the parent company's currency and the cost can be allocated beyond the control of managers. Environmental factors such as social culture, economic, political, legal, and differ in one country from another country is out of control, but managers will affect company profits and ROI.


Resources:

http://wartawarga.gunadarma.ac.id/2012/04/model-sistem-umum-perusahaan-11/

http://doublehasanah.wordpress.com/2008/01/02/kaizen-ciri-khusus-manufaktur-jepang/

http://wentiyuniati.wordpress.com/

http://harapanbunde.wordpress.com/2011/04/15/perencanaan-dan-kendali-manajemen/

http://www.scribd.com/doc/38205193/Biaya-Modal-Dan-Struktur-Modal-an-Multinasional