Accounting Culture

Introduction to Culture

The culture in different countries can be defined as all different behaviours, arts,

Beliefs and institutions of a population which changes from generation to generation. As such, different culture having different codes of manners, dress, language, religion, rituals, norms of behaviour such as law and morality as well as gastronomy.

Culture is like an iceberg. You can see some parts of an iceberg вЂ" just like you can see culture of different country. For example, different ways of greeting people, hear different language and observe different festival and customs. However a much bigger part of iceberg is hard to see still it is very important, without it the iceberg would not exist. There are many aspects of it which you cannot see when you visit a different country, for example the nature of friendship and the importance of time.

Factors affecting cultures

Cultural difference in International Business: International business, especially where joint venture or long term deals are involved, is fully filled with lots of difficulties. Apart from practical and technical problems, national psychology and characteristics often interfere at the top managerial level. Corporate cultures differs widely inside one country (compare Apple and IBM in the US, or Sony and Mitsubishi in Japan); national business styles are markedly more diverse. In a Japanese-US joint venture, where the Americans are interested mainly in profit and the Japanese in market share, which direction is to be taken?

THE BEHAVIOUR OF THE MEMBERS OF ANY CULTURAL GROUP IS dependent, almost entirely, on the history of the people in that society. It is often said that we fail to learn the lesson of history вЂ" and just because of that lots of mistakes repeated over hundreds of years by successive generations.

Choice and selection of food: Religion plays one of the most influential roles in the choice and subsequent selection of foods consumed in certain societies by certain religion. For example, in the Hindu and Buddhist religion the consumption of pork and beef is frowned upon. As a result of this large majority of both religions have taken this rule to extremely and are strict vegetarians, despite being allowed to eat chicken and lamb. Conversely only the use of pork and not beef is prohibited for the same reasons in the Islamic religion and Judaism. However all other meats consumed in these religious must be halal and kosher (part of prayer) respectively. This means that special prayers are performed in order to make the eating of these animals acceptable. In extremely contrast Christianity and the Catholic religion allow the consumption of any types of meat without the need for any king of repentance to God in the form of prayer. While at the other extreme to these religions the Jain religion does not allow the eating of any meat and any vegetable grown beneath the soil.

Language: To begin with, one should face the fact that to understand what makes foreign colleagues tick, there is no substitute for learning their language, reading books produced by the culture and familiarising oneself with the country’s basic history. To achieve modest fluency in a European language, 250-500 hours of direct teaching will be required preferably over a three month period while the Japanese, Chinese, Arabic and Russian any many more language require almost double time.

Influence of Culture on accounting

Culture is considered to be powerful environmental factor that affects the accounting system of a country as well as how individuals perceive and use accounting information. There are three predominant areas in which the influence of culture on accounting has been studied:

1. Financial reporting,

2. Auditors’ judgement and attitudes,

3. Management control system.

The influence of culture on accounting systems in different countries has been a research subject for more than decades and being investigated by many international accounting authors since 1960’s and makes important contribution to accounting by time to time. Culture and politics have been identified as important influences on the process of accounting change and the need for historical studies of accounting change, analysing the influence of culture and different in social , political and economic context.

There have been many studies that suggest that a country’s culture is an important powerful factor that affects the accounting system that is seen and is factor that needs investigation. The focus on the role of culture on accounting was first considered in the international business literature and has become an important area of research mainly since the 1980’s within different international accounting culture. For example Jaggi (1975), Choi et al (1984), Bloom and Naciri (1989), Belkaoui (1989, 1994), Violet (1983) and McKinnon (1986) have all worked on culture and accounting.

Jaggi (1975) hypothesised that culture affected a manager’s disclosure decisions especially regarding the adequacy and accuracy of the information disclosed. He compared the culture of developed countries and less developed countries, that due to the differences in the culture between the two, the accounting disclosure systems may not be transferable from the former to the latter.

Choi et al (1983) restated some Japanese and Korean financial statements using US GAAP and found that ratios of the Japanese and Korean companies were still very different to those of companies from USA. This demonstrated that accounting was not just a technical tool but that institutional, cultural and political factors were important in understanding differences in accounting systems and financial statements of different countries.

McKinnon (1986):- in her work on the historical development of the accounting system in Japan using a social systems approach, too recognised the importance of culture. She argued that the development of accounting, like any social process, is affected by national culture and the institutional environment since “Culture Influence

Using the framework, McKinnon analysed five accounting changes in Japan from 1890 to 1986 and provided cultural explanations for accounting change and the development of accounting system.

The Hofstede-Gray

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