International Fashion Industry Accounting Practices

This paper compares the accounting and operation funding practices of three international companies in the fashion industry: GAP-U.S.A.; H&M, a Swedish company; and Benetton, an Italian company.

This paper explains that, examining the accounting measures and practices of each of these companies, both the American and European companies have a bottom-line concept of accounting that is represented by the basic accounting principle of ‘assets=liabilities + equity’. The author points out that, in the United States, laws require a financial statement unless a company is traded on the stock exchange; in Europe, companies, which have only debt securities listed on the EU regulated markets, and which have securities listed on the non-EU markets, are required to prepare consolidated accounts according to internationally recognized standards. The paper demonstrates the difference in international reporting practices, which make comparison almost impossible; with globalization, these differing practices must be standardized.
“Any company financial statement includes some basic information; a balance sheet, income statement, cash flow statement and financial statement notes, which explain any irregularities or noteworthy numbers. The United States has been lobbying to create a standardized representation of these numbers to create a level playing field when it comes to comparing financials. Although, Europe is slightly behind in this endeavor, they are also moving towards the concept of standardization.”