Chapter 2: Worldwide Accounting Diversity · Worldwide Accounting Diversity § Nature of diversity...

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Chapter2:WorldwideAccountingDiversity

LearningObjectives

§ Provideevidenceofthediversitythatexistsinaccountinginternationally

§ Explaintheproblemscausedbyaccountingdiversity§ Describethemajorenvironmentalfactorsthatinfluence

nationalaccountingsystemsandleadtoaccountingdiversity§ Describeajudgmentalclassificationofcountriesbyfinancial

reportingsystem§ Discusstheinfluencethatcultureisthoughttohaveon

financialreporting§ Describeasimplifiedmodelofthereasonsforinternational

differencesinfinancialreporting§ Categorizeaccountingdifferencesinternationallyandprovide

examplesofeachtypeofdifference

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WorldwideAccountingDiversity

§ Natureofdiversityinaccounting§ Format§ Terminology§ Recognitionrules§ Measurementrules

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WorldwideAccountingDiversity:Reasons

§ Legalsystems§ Commonlaw§ Fewerstatutes—morecourtinterpretation§ Creationofprecedentsorcaselaws§ GreatBritainandotherEnglish-speakingcountries§ Accountinglawisdetailedandspecific§ Sourcesarenonlegislativeorganizations

§ Codelaw§ Morestatutes§ Non-English-speakingcountries§ Legislatedaccountingrules§ Accountinglawisgeneral§ Otherguidancerequired

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يكفي السلايد هنا اسباب التنوع في المحاسبه

WorldwideAccountingDiversity:Reasons

§ Basisfortaxation§ Publishedfinancialstatements§ Germany—sametaxableincomeandbookincome

§ Financialstatementsadjustedfortaxpurposes§ U.S.—differenttaxableincomeandbookincome§ Differencebetweentaxandaccountingincomegivesrisetodeferredincometaxes

§ Providersoffinancing§ Accountinganddisclosureislessimportantwheremajorsourcesarefamilies,banks,andthegovernment

§ Accountinganddisclosureismoreimportantwheremajorsourcesarediverseshareholders

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اختلاف كيف كل دوله تدعم تمويلها

WorldwideAccountingDiversity:Reasons

§ Inflation§ Somecountrieshavehistoricallyhighratesofinflation§ Necessitatesadjustmentstooffsetinflation

§ CommoninLatinAmericancountries§ Politicalandeconomictiesaffecthowaccountingrules

areconveyed§ Correlationoffactors

§ Commonlawcountrieshavedomesticlistedcompaniesrelyingonequityforcapital.

§ Codelawcountriestendtolinktaxationtoaccountingstatementsandrelylessonfinancingprovidedbyshareholders

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ProblemscausedbyAccountingDiversity

§ Preparationofconsolidatedfinancialstatements§ Accesstoforeigncapitalmarkets§ Comparabilityoffinancialstatements§ Lackofhigh-qualityaccountinginformation

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PreparationofConsolidatedFinancialStatements§ Problemsdueto:

§ Localregulations§ BooksInlocalcurrency§ Localaccountingprinciples

§ Requires:§ Considerableeffort§ Additionalcost§ Expertiseindifferentcountry’saccountingstandards

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المشكله هذي ايش تتطلب عشان تنحل

AccesstoForeignCapitalMarkets

§ Requiresfinancialstatementsasperlocalaccountingstandards

§ Considerableeffortandcostinvolved

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ComparabilityofFinancialStatements

§ Lackofcomparabilitybetweenfinancialstatementsfromdifferentcountries

§ Thisadverselyaffects:§ Investmentdecisions§ Lendingdecisions§ Performanceanalysis§ Foreignacquisitiondecisions

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LackofHigh-QualityAccountingInformation§ Lackofhigh-qualityaccountingstandards§ Inadequateriskassessment§ Lackofappropriatedisclosurerequirements§ Disclosuredeficiencies

§ Related-partytransactionsandoff-balance-sheetfinancing§ Highexposuretoforeignexchangerisk§ Investmentsinhighlyspeculativeassets§ Contingentliabilitiesguaranteeingforeigncurrencyloans§ Loanlossprovisions

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AccountingClusters

§ Accountingmodels§ TheFairPresentation/FullDisclosureModel(Anglo-SaxonorAnglo-Americanmodel)§ Orientedtowardthedecisionneedsoflargenumbersofinvestorsandcreditors

§ UsedinEnglish-speakingcountriesinfluencedbytheUnitedKingdomortheUnitedStates

§ TheLegalComplianceModel(ContinentalEuropeanmodel)§ Legalistic§ Usedtoprovideinformationfortaxationandgovernment-planning

§ UsedinEurope,Japan,andcodelawcountries§ TheInflation-AdjustedModel§ ResemblestheContinentalEuropeanmodel§ Requiresextensiveuseofadjustmentsforinflation

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JudgmentalClassificationofFinancialReportingSystems§ DevelopedbyNobes§ Micro-based—Anglo-Saxonmodel§ Macro-uniform—ContinentalEuropeanmodel

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Micro-basedaccountingsystems

§ Firstsub-classinfluencedby§ Businesseconomics§ Accountingtheory§ Example:Netherlands

§ Secondsub-classinfluencedby§ Businesspractice§ Pragmatic§ Example:British-origin§ UnitedKingdomandUnitedStatesdominated

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Macro-uniformaccountingsystems

§ Firstsub-class:§ Alignedwithnationaleconomicpolicies§ Example:Sweden

§ Secondsub-class:§ Continental:government,tax,legal§ Example:ContinentalEuropeancountries§ Law-basedfamily:Germany,Japan§ Tax-basedfamily:SouthernEuropeancountries

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Exhibit—2.5Nobes’s JudgmentalClassification

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InfluenceofCultureonFinancialReporting

§ Hofstede’sculturaldimensions§ Gray’saccountingvalues§ ReligionandAccounting

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Hofstede’sculturaldimensions

§ Fourculturaldimensions§ Individualism(vs.collectivism)§ Preferenceforalooselyknitsocialfabric

§ Powerdistance§ Acceptanceofhierarchyandunequalpowerdistribution

§ Uncertaintyavoidance§ Comfortlevelwithuncertaintyandambiguity

§ Masculinity§ Emphasisonmasculinevaluesvs.femininevalues

§ Long-termorientation§ Focusonfosteringvirtuesorientedtowardsfuturerewards

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Gray’sAccountingValues

§ Fourwidelyrecognizedaccountingvaluestodescribeacountry’saccountingsubculture§ Professionalismvs.StatutoryControl§ Uniformityvs.Flexibility§ Conservatismvs.Optimism§ Secrecyvs.Transparency

§ Believesthatnationalculturalvaluesaffectaccountingvalues

§ Accountingvaluesofconservatismandsecrecyhavethegreatestrelevance

§ Gray extendedHofstede’smodeltounderstandhowcultureinfluencesthecorporatereportingsystems

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Exhibit—2.8FrameworkforAccountingSystemsDevelopment

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ReligionandAccounting

§ Religiondefines§ Nationalcultureinmanypartsoftheworld

§ Ithassignificanteffectonbusinesspractice§ Example:BankingcompaniesunderShariah,theIslamiclawofhumanconductderivedfromtheKoran

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ASimplifiedModeltoExplainFinancialReportingInternationalDifferences§ Nobes’s modelarguesthatinternationalreportingdifferences

areduetodifferentpurposes§ Country’sfinancingsystemisconsideredmostrelevantfactor

todeterminethepurposeoffinancialreporting§ Nobes dividesreportingsystemsintotwoclasses—AandB

§ ClassA§ Strongequity-outsidersystem§ Lessconservative§ ExtensiveDisclosure§ Accountingpracticediffersfromtaxrules

§ ClassB§ Weakequity-outsideshareholderfinancing§ Moreconservative§ Disclosureisnotextensive§ Accountingpracticefollowstaxrules

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FurtherEvidenceofAccountingDiversity

§ Categoriesbasedonaccountingdifferences§ Financialstatementsincluded§ Financialstatementformats§ Levelofdetailinfinancialstatements§ Terminology§ Disclosure§ Recognitionandmeasurement

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ارجع للكتاب اوضح

EndofChapter2

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