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Influence of Culture on Accounting - Essay Example

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Influence of Culture on Accounting

Uniform implementation of International Accounting Standards is taking a long time mainly for this reason. The concerns and constraints of each country are different and most of the countries have well developed accounting norms and standards which they feel are quite adequate for their needs. It is another story that a reader from an alien culture might find the accounts presentation style too elaborate or too brief
Dieter Ordelheide (2004 p.269) states that accounting is a social institution. He further states that Accounting is concerned with nothing less than the conceptualization of capital, its concrete expression in numbers, as well as its budgeting and monitoring, and thus with a societal institution that is so central to our economic system that it has given it its name. We might talk of global and market driven economies, the ways and means of determining the income or assets are the core of the entire financial and economic set up. Each cultural group uses these to tray and better their financial position within the culture they belong to.
"Professionalism versus Statutory Control-a preference for the exercise of individual professional judgment and the maintenance of professional self-regulation as opposed to compliance with prescriptive level requirements and statutory control.
Uniformity versus Flexibility-a preference for the enforcement of uniform accounting practices between companies and for the consistent use of such practices over time as opposed to flexibility in accordance with the perceived circumstances of individual companies.
Conservatism versus Optimism-a preference for a cautious approach to measurement so as to cope with the uncertainty of future events as opposed to a more optimistic, laissez-faire, risk-taking approach.
Secrecy versus Transparency-a preference for confidentiality and the restriction of disclosure of information about the business only to those who are closely involved with its management and financing as opposed to a more transparent, open, and publicly accountable approach."
Thus as per this hypothesis each of these conflicting factors have influenced the development of the accounting standards depending upon their prevalence and dominance in the cultures being referred to. To take the example of Greek economy where the businesses tend to be closely held and public participation is indirect at its best mainly in the form of lending by banks, the need for disclosure or window dressing balance sheets is negligent. So the accounting systems which developed were fairly simple such that the limited number of stakeholders can understand the basic numbers. Of course with integration within the EU the disclosure norms have become more complex still not as complex at other developed countries say USA or Canada. In Greece one suspects that the tax bureaucrats have had a strong hand in dictating the shape of accounting conventions which are still followed. The Greek business houses being closely held tend to be wary of disclosing information to competitors so it is uncommon to see segment ...Show more

Summary

Culture can be broadly defined as the art, ideas and way of life of a group of people. It is not something concrete which can be touched or seen yet it is the backbone of any developed society. Just as different cultures have developed different models like, political structure, social hierarchy, occupational patterns, so have accounting norms been influenced by the culture they have developed in…
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Influence of Culture on Accounting essay example
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