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International Accounting and Harmonization

International Accounting and Harmonization. Muhammad Bahrul Ilmi , S.E Lecturer of Accounting Economic Faculty Solo Business School STIE Siurakarta. Cultural Influences on Accounting.

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International Accounting and Harmonization

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  1. International Accounting and Harmonization Muhammad BahrulIlmi, S.E Lecturer of Accounting Economic Faculty Solo Business School STIE Siurakarta

  2. Cultural Influences on Accounting One of the major objective of financial reporting is to provide information user for making economic decisions. Since environment differ from country to country, the types of decision that need to be made and their information requerments are also different. This explains why there are different accounting system in different countries : Accounting provides information for making economic decision in the Uniqe environment of Each country, therefore, the accounting systems are necessarily environment-specific.

  3. There are Five major environmental influences that collectively cultural or societal values : • The Economic system • The Political system • The Legal system • The Educational system • Religion

  4. Economic system Political system Legal system Educational system CULTURAL (societal) VALUES religion Accounting Profession’s Value Accounting System

  5. The Economic System The Degree of Economic development and the level of technologhy in a country determine, to a great extant, the level of complexity of its accounting system. The accounting system of an aconomicallay country with a high –technology economy would be different from accounting system of a country with primarily an agrarian economy.

  6. The Political System The Political system of a country, its philosophy, and its objectives determine board economic policies such us as centrally planned versus market-driven economies, and private ownership versus public ownership of property

  7. The Legal System “ In many countries, including some WestrenEuropencontries, the legal system has a direct impact on a accounting … “ Laws contain detailed accounting regulation specifying comprehensive accounting rules and procedures. In such countries, accounting rules are based on legislative requirement. The government, therefore, determines and enforces these requirement through accounting rules

  8. The Educational System The educational system and the level of literacy in a country impact the country’s accounting system in two ways : • Well-educated user accounting information can be understand sophisticated accounting information • The accounting in a country that has high educational standards are usually better trained and possess the necessary competencies and skill to satisfactorily complete their professional assignments. In sum, educational backgrounds of both users and prepares of accounting information strongly affect the degree of development and level of sophistication of a country’s accounting system

  9. Religion Religion, in the broad sense of term, affect basic accounting concept. In many Muslim country’s, e.g., Pakistan, the idea of interest on loans is country to widely held religious belief. The female owner of a business cannot deal directly even with her own male employess.

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