1.

4 International auditing and Cross-border transactions

Cross-border transactions refer to financial transactions that occur between parties located in
different countries. These transactions can include cross-border trade, investments, and financing
activities. As globalization has increased, cross-border transactions have become more common,
creating new challenges for auditors. To effectively audit cross-border transactions, auditors
must understand the complexities associated with international business activities. Auditors must
navigate differences in accounting and financial reporting standards, cultural differences,
language barriers, and legal and regulatory frameworks. They must also consider the impact of
foreign exchange rates, taxation, and other international factors that can affect the accuracy and
reliability of financial statements. Effective auditing of cross-border transactions requires
auditors to have a deep understanding of the client's international business activities and the risks
associated with these activities. Auditors must also be familiar with international auditing
standards and regulations and be able to apply these standards in a cross-border context. the
audited annual financial statements, if the effective date of a filing is more than ten months after
yearend, then there is a requirement for condensed interim financial statements. 23 Until very
recently, the requirement for interim financial statements was triggered after only six months.
There are some specific procedures that are required for U.S. audits that may not necessarily be
performed as a regular part of an audit in other countries and may be difficult to perform on an
ex post facto basis. For instance, observation of inventories is a mandatory U.S. auditing
procedure. If that hasn'tbeen done and if inventories are significant, companies may simply be in
a position where they have to delay their offering in order to have audits that comply with U.S.
auditing standards. Income from a low-tax country that is received in the United States can
escape taxes because of cross crediting: the use of excess foreign taxes paid in one jurisdiction or
on one type of income to offset U.S. tax that would be due on other income. In some periods in
the past the foreign tax credit limit was proposed on a country-by-country basis, although that
rule proved to be difficult to enforce given the potential to use holding companies. Foreign tax
credits have subsequently been separated into different baskets to limit cross crediting; these
baskets were reduced from nine to two (active and passive) in the American Jobs Creation Act of
2004