Accounting for McDonald’s

Watch the video titled Accounting for McDonald’s. (https://media.pearsoncmg.com/pcp/pls/pls_mycoursetools/business/myiblab/mcdonalds.html?iframe=true&width=800&height=500&align=center)
• Comment on your impressions of accounting issues and procedures for McDonald’s after watching the video. For example, amount of work involved in compiling the financial statements, accounting standards, currency issues, and the amount of detail are some topics to consider, but not the only ones.
Expectations: One original comment the first week of the module and two follow-up comments based on colleagues’ thoughts. Three postings do not guarantee full credit: Content and timeliness matter, too.

Responses: (100 words for each)

1. Accounting for McDonald’s

Shawne Scott
Accounting for McDonald’s is not a small task. With 27,000 restaurants world-wide there is probably no room for error and if there is it has to be minimal due to the fact that your dealing with different time zones, can you imagine coordinating a meeting between Japan, France, South Korea and the United States. Once that hurdle has been jumped then were dealing with language barriers and we haven’t even started to crunch numbers yet. Tying everything up so that it all makes sense is probably McDonald’s toughest task because as everything is finalized in the United States, the numbers from other countries must be filtered and taxed on their end before it is in the United States. When it comes to the accounting aspect of McDonald’s you have to be amazed at what it is representing in the fast food industry.

2. Mcdonalds

Greggory Bennett
To begin, I am blown away, Mcdonalds has created a consolidated financial reporting system that allows them to receive and process financial information from over 25,000 stores and 100 subsidiaries in just four days. Obviously, the video was created years ago, now, their store and subsidiaries count is over 37,241 (statista.com, 2018). Four days! I have a rough time consolidating my personal finances.
I would like to discuss the reporting funnel they have created.
Consolidated financial reporting

 Decentralized reporting

Consolidated reporting
• Local consolidation
• Country consolidation
• Regional consolidation
Final consolidation – headquarters
• All data is processed and centralized to meet SEC regulations
• Processed to meet us standards
• Not all countries follow the same accounting practices and standards HQ processes the data to Meet GAAP standards(generally accepted accounting principles)
• Balancing is done against the test balance and currency difference
Projections are made
• Every store holds a 3-year protection plan
• Projection plans are tested for accuracy
Financial reporting
• Monthly
• Quartly
• Annually
Books are closed
The above is an outline breakdown of Mcdonalds consolidated financial reporting funnel. The challenges the video mentioned seems staggering, working around the hundreds of country laws and cultural differences, technology differences, and currency. Yet, their process allows them to receive and consolidate all financial information in a four day period.
This video has opened my eyes to the importance of not only accounting but also the process an entity must use to remain compliant and effective.

References
https://media.pearsoncmg.com/pcp/pls/pls_mycoursetools/business/myiblab/mcdonalds.html?iframe=true&width=800&height=500&align=center
https://www.statista.com/statistics/219454/mcdonalds-restaurants-worldwide/
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3. Accounting Global Technology Issues

Barry Canada
I am just simply amazed that McDonald’s is able to quickly compile financial statements for all 37,241 global restaurants. If all of their restaurants were in the continental United States, sure, it would be slightly easier. However, they have franchises in more than 100 countries. That to me would be an accounting nightmare. Compound the fact that there’s currency conversions or translations that have to be completed in order to get an accurate report, and technology issues that have to be addressed in order to ensure reports are received in a timely manner. It’s just simply amazing at how all of this work is done so quickly and efficiently.
References
Number of McDonald’s restaurants worldwide from 2005 to 2017*. Retrieved from https://www.statista.com/statistics/219454/mcdonalds-restaurants-worldwide/
Form 10-K, McDONALD’S CORPORATION (Mar 1, 2017). Retrieved from https://www.sec.gov/Archives/edgar/data/63908/000006390817000017/mcd-12312016x10k.htm