Business Report for Tardis Ltd. Essays

Submitted By Raissa0109
Words: 1666
Pages: 7

Business Report for Tardis Ltd.

1.0 Introduction

1.1 Purpose The purposes of this report are to understand the financial reporting environment of Mexico in regards to the proposed expansion plans of Tardis Ltd and to investigate whether the country would potentially be a suitable site for the formation of a publicly listed subsidiary of Tardis Ltd. 1.2 Scope While investigating the financial reporting environment, it is important to understand the current economy and financial stability of the country.

1.3 Limitations The limitations of the report include the social, economic and political effects of financial reporting of the country. This report is prepared based on past statistics and may vary with unobtainable current statistics.

1.4 Assumptions Tardis ltd is assumed to be a going concern and continue to experience growth. It has also been assumed that the tax rate in Mexico is unchanged. The requirements to list companies on the Mexican stock exchange are also assumed to remain the same. Any other government regulations for the operations of the business and the requirements to set up the subsidiary company are also presumed to be unchanged.

2.0 Findings
2.1 Historical Influences on Financial Reporting The Mexican financial reporting history is divided into five stages ( Previtz 2011). The first stage is the pre-Spanish conquest, which is dated back before the arrival of Spanish conquerors. The Mayan and the Aztec are the reigning cultures through this period of economic boom. A system of a court with 12 judges was utilized to resolve any conflict among merchants and a strict compliance was maintained (Previtz 2011).
The second stage is the era of Spanish colonization in 1951. In this era, Fernando V and Isabel I of Spain introduced the trading house for the purpose of preserving and controlling trades within the colony on all conquered territories. A president, three judges, and ministers managed the house with the judges carrying out specific accounting responsibilities (Previtz 2011). All economic transactions were recorded based on the single-entry system and in roman numerals. The third stage is the transitional era, which commenced when Mexico received independence. King Fernando VII promulgated the Commerce Code in the first transitional era in 1814, which requires merchants to keep records of transactions in a general journal, a ledger, a book of purchase and sales, and a copybook of letters. Due to the lack of accounting standards, bookkeepers used their best judgment to record transactions (Previtz 2011). During the second transitional era, President Diaz introduced a third Commerce Code to eliminate all foreign and prior Mexican legislations. The new code instructed merchants to account all transactions in the general journal, the ledger and the book of inventories and balances (Previtz 2011). These were the first few codes to be introduced. These then led to more refine accounting standards. Dating back to 1902, the fourth stage is the Era of the Mexican Institute of Public Accountants (IMPC). Mexico did not have an appropriate political context before the IMPC era to develop its own set of standards and therefore relied on Spanish accounting criteria introduced during the Spanish conquest (Previtz 2011). Mexican reporting standards began development with the introduction of the Public Accounting program and the creation of the IMPC (Previtz 2011). The system still lacked a set of principals and guidelines despite the significant growth in the Institute’s recognition and the substantial development in the reporting standards. Therefore public accounting firms resolute accounting concerns differently from each other and did not disclose their approaches (Previtz 2011). The reporting practices differ from each accounting firm and this affects the comparability of financial reports and the quality…