Influence of National Culture on Accounting MyAssignmenthelp.com

Question: Discuss about the Influence of National Culture on Accounting Conservatism. Answer: Introduction: The international accounting system is dynamic and in so doing presents various challenges among the persons undertaking the financial responsibilities for different firms. Accounting remains essential in organizations for the sole purpose of communicating an organizations financial position to the investors, managers, the government, and fiscal institutions. In this case, it provides a particular set of principles and rules guiding the content of the financial statement. Eventually, accounting leads to the reality of consistent reporting of the financial position of a firms asset which expresses the health status of a company. While global accounting may be viewed as an easy task, it comes with a set of challenges to the financial individuals and the organizations as well due to several factors involved in its practice. It is evident that the present world is changing the face of doing business and thus makes the world better by initiating a competition among the financial firms. The accounting professionals in global businesses are not left out in the change that prompts the professionals to reorganize themselves towards adopting strategies in modern accounting (Radebaugh, Gray, and Black 2006). The global world makes things easier by creating a uniform financial system and internationally accepted standards in conducting business. However, the adherence to the international standards remains a challenge due to the differing legislations that affect the financial operations of a firm. Traditional Accounting Standards Historically, different countries have been using their accounting standards which make it hard to compare and contrast companies operating in various nations. Therefore, individuals might be reluctant to adhere to the international standards as the local policies support the existence of the traditional accounting procedures. According to Hail, Leuz, and Wysocki, (2010), the dependence on the local procedures and policies in accounting presents a challenge to the international accounting practices for various logistical and financial issues. In this case, the existence of the traditional procedures impedes the commitment to change and adoption to the international standards of accounting. Adhering to the international standards presents a set of challenges to the accounting professionals. First is the challenge based on the issue of incentives where there exist several factors that might encourage incentives to the individuals while others are discouraging the same throughout organizations. Different nations present differing incentives to the accounting professional which affects the operational of accounting professionals in the global businesses (Kaplan, Atkinson and Morris, 1998). While some countries through incentives may encourage acts of accounting, others without the incentives impede serious accounting practices which lead to challenges to their international accounting. On the other hand, countries have a differing commitment to the adoption of the international accounting standards. Governments enact regulations to the financial institutions which differ from nations to nations. The difference in the regulatory authorities might either encourage or discourage the existence of a proper adoption of the internationally accepted accounting practices (Camfferman and Zeff, 2015). Countries that block transparency in financial practices make international accounting a nightmare due to the policies that prevent the professionals from carrying out their tasks smoothly (Saunders and Cornett, 2014). Therefore, the differences in legislations matter in the existence of international accounting. Cultures existing in different nations determine the perception and commitment to the international standards of accounting. While it might be easy to adopt international standards in some countries, others may exhibit resistance leading to difficulties in practicing the same. Therefore, businesses working in the global space face problems as the accounting practices on the international standards cannot exist, thus impeding uniformity in the financial institutions working (Camfferman and Zeff, 2015). The lack of a uniform culture serves as a challenge to the international accounting practices and formulas. The difference in culture leads to the implementation of accounting practices in different formats which limit the capability of investors making comparison to other nations thus leading to the lack of faith in the local practice. As a result, investors might fear setting up businesses in such locations. Poor Translation and Interpretation While international laws on accounting practice might be uniform, the issue of translation of the policies in the effective working might differ, thus presenting challenges to the respective organizations involved in global businesses. Lack of knowledge and proper education on accounting procedures among professionals might lead to diverse means of interpretation thus leading to different results and practices by individuals (Albu, Albu, and Alexander 2014). The case presents challenges for the international firms which seek to have a uniform set of practices across their businesses. Consequently, companies that fail to meet the international standards of accounting may hinder the existence of the policies thus presenting different results that ought to match for global businesses (Bebbington, Unerman and O'Dwyer, 2014). For instance, the presence of different translations of the policies might affect the accounting operations of a firm like coca-cola which needs a uniform working gl obally thus leading to non-compliance issues. Eventually, the fact presents a financial challenge to the professional accounting body. Moreover, the issue of education affects the functioning and interpretation of the international accounting procedures and practices. The education standards in some countries do not conform to the international standards and as such differ in the dispensation of knowledge. The differences give rise to challenges that hinder the implementation of international practices at the domestic level (Deegan 2013). The differences affect the local performance in line with the international standards at this moment leading to a stampede to international firms operating the local levels which demand uniform accounting practices among their franchises. Besides, the international accounting policies and practices have a high frequency of changing that presents complexity to the international accounting. While some countries, through their policies might be quick to adopt the changes, others might be slow to incorporate the same at the domestic level (Guthrie and Parker 2014). The lack of will or technology to embrace the fast pace of change leads to challenges in practicing the latest demands of accounting. As a result, individuals with businesses on the global market might fail to have the different businesses in selected countries accounting in line with the provisions of the international markets. The international standards of accounting may be substantial to businesses but expensive to implement thus presenting implementation challenges. The medium sized entities and accounting firms who lack the resources and personnel to adopt the international policies and procedures may fail to utilize the provision. Consequently, such companies opt to remain glued to the traditional practices which fail to demonstrate the nature of the global accounting practices (McFarlin and Sweeney 2014). The different standards may affect the uniform expectations on international firms operating in such a local environment with poor resources towards international accounting practices. Most countries face difficulties in the adoption of the international standards and accreditation. Limited accessibility to the standards matching international business presents a barrier towards international convergence (Kanagaretnam, Lim, and Lobo 2013). Some countries, especially in the developing nations might cite the high fees charged for accreditation as factors impeding their ability to obtain international financial certification for local accounting firms. Individual Restrictions At personal levels, the rapid changes in the accounting field through technology and global trends calls for accountants to adjust their positions towards the adoption of the international standards and practices. Accounting firms with professionals with limited levels of education hinder the implementation and adherence to the international standards (Solas and Ayhan 2016). Lack of knowledge may lead to adherence to local and traditional practices of accounting that differ from the international standards. As a result, the lack of knowledge on the use of technology in implementing financial obligations may lead to non-uniform results which make interpretation and comparison difficulties among global firms. Consequently, the situation presents challenges to the international accounting. On the other hand, global accounting calls for proper communication skills as a requisite factor among the accounting professionals. As such, it affects the act of presenting and defending views on accounting orally and in written using the technological means. The ability to communicate and display negotiation skills in common languages promotes uniform accountability (Alzeban and Gwilliam 2014). However, the present market does not guarantee a high market for individuals with such skills which hinder the implementation of the international standards. At the same time, the inability to utilize the latest technology in accounting presents a challenge to the accounting field. Accountants need to communicate more efficiently at the local and the international levels with their counterparts to find out the latest trends and practices in accounting. The revolution in technology does not impede communication but on the contrary presents chances for enhanced communication with the global accountant where such alliances might lead to proper practices (Fernandez-Feijoo, Romero, and Ruiz 2014). While one business in a nation may use a particular technology conforming to the latest technology, another company similar in nature, but working in a developing nation may fail to replicate the same. The situation presents a challenge to uniformity in a business where investors cannot compare the overall performance of a business to another in the same region. Personal Adaptability to International Standards Flexibility of individuals to international standards presents a challenge to the accounting world. While a country may fail to observe and implement the international practices, individuals through technology can be able to conform to the same and remain in line with the latest trends in global accounting. In this case, people are tasked with the responsibility of participating in knowledge acquisition activities to gain the requisite skills to international accounting. Technology gives accountants the ability to learn several practices which can be learned on the internet as opposed to the local level that might fail to cultivate the standards used locally (Florou, Kosi, and Pope, 2017). The ability gives accountant an upper hand in understanding the international practices and using them in their daily operations. However, the ability to do so depends on a personal commitment to the profession. The lack of adaptability and willingness to overcome the local practices not conforming to the international standards presents a challenge to global accounting. The differences in ethical considerations and practices based on the culture of nations acts as a challenge to international accounting. International accounting expects individuals to use globally accepted ethical guidelines which might differ from the local considerations thus present challenges to the case (Yarahmadi and Bohloli, 2015). As such, the ethical issues in accounting affect the practices initiated by accountants in their local levels. The fact remains a hindrance on international businesses that expect their accountants to behave in a similar manner when it comes to financial information disclosure. Failure to adhere to the international ethics in accounting results in severe damage to reputation should a companys accounting sector act contrary to the provisions in the international front (Florou, Kosi, and Pope, 2017). Ethical guidelines ought to be incorporated during training which can be done in-house or through educational institutions to align firms with the inter national policies and standards. The presence or absence of technology in different nations present different challenges to the global accounting world. While the countries in the developed countries might have access to technology and use it in accounting, others in the developing nation might fail to enjoy the same privilege due to the absence of technology or the necessary expertise to utilize the same in accounting. The difference in technology might impede the use of accounting software across nations thereby creating non-uniform accounting practices (Deegan 2013). As a result, firms working on the international front may fail to have the ability to compare the financial performances of businesses existing in divergent markets. Accounting calls for transparency in the financial dealings that have to be left open at all times to scrutiny by the respective firms. However, the challenge presents difficulty to such transparency needed for improved operations and increased investment. Conclusion The present world is changing at a faster pace which offers a set of challenges to the global accounting world. While some nations may be quick and willing to adapt to the latest trends in accounting, others may fail to demonstrate a similar commitment due to several issues. At the same time, individuals in the accounting profession matter in their willingness and ability to utilize technology to allow the current practices to prevail. Therefore, the differences present challenges to the global accounting that ought to be uniform across nations to guarantee the spread of international business. As such, there is a need for a change of policies and individual commitment to use of technology towards exercising a uniform accounting practice for transparency and financial reasons. Reference List Albu, C.N., Albu, N. and Alexander, D., 2014. 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