An Analysis of the Obstacles of Culture, Government, and Lack of Support for International Financial Accounting Standards

By Kushniroff, Melinda C. | Academy of Accounting and Financial Studies Journal, November 2012 | Go to article overview

An Analysis of the Obstacles of Culture, Government, and Lack of Support for International Financial Accounting Standards


Kushniroff, Melinda C., Academy of Accounting and Financial Studies Journal


OBSTACLES FOR IFRS

International markets are becoming more and more common in today's society; people are investing in stocks in foreign countries and doing business overseas with regularity. The world is quickly becoming more interconnected and more involved as technology develops. Cell phones, the internet, and quicker transportation make business opportunities endless. With a quickly changing world, new needs arise that were previously unnecessary or irrelevant. When these needs arise, new standards or laws may be proposed to keep markets running smoothly. In the area of accounting, with international markets comes the need for harmonization of international accounting standards: "Harmonization is the process of bringing international accounting standards into some sort of agreement so that the financial statements from different countries are prepared according to a common set of principles of measurement and disclosure" (Osborne, 2001). If harmonization were to occur, companies would no longer have to deal with the hassle of reformatting their financial statements from one country to the next. It would eventually be more cost efficient and certainly time efficient. This would not only aid the specific business, but would also be beneficial to investors, especially in understanding the financial position of a business for stock purposes.

With a huge revolutionary idea there are costs that must be accounted for as well. Although it is not argued that international accounting standards have many benefits to offer companies, there are some negative aspects or obstacles that must be thoroughly examined in order to make accounting harmonization possible. Two of the major problems specific to the differences among countries are cultural diversity and governmental differences (Osborne, 2001). A third major challenge for each nation that has or is thinking of changing to international standards is the lack of support among some or many of the nation's people.

In order to do a thorough analysis of these obstacles, this paper will specifically focus on three countries: China, India, and Australia. This paper will provide information on cultural values in a general sense through the eyes of a few researchers; it will then apply how these cultural values affect the mindset of a particular country and how this mindset may cause differences to occur on financial statements. The next section of the paper will present a brief history of the government of each country, an explanation of the government's control, an account for the government's support of international standards, and finally a report of how international standards can work or are working for each country. Last, there will be a focus on the positives and negatives related to the change of accounting standards for the business owners and accountants in the three countries. There will also be an explanation about how to overcome the lack of support for the change in standards in these nations.

THE OBSTACLE OF CULTURE

Those opposed to universal accounting standards have argued that differing cultures would make it impossible to have international accounting standards. According to Timothy S. Doupnik (2004), a professor at the University of South Carolina, "Culture is considered to be a powerful environmental factor that affects the accounting system of a country, as well as how individuals perceive and use accounting information."

Culture can have a huge influence in the way that accounting standards are formed and the way that financial statements are prepared. There are specifically three areas in which people have found that culture affects accounting standards. This involves the reporting of financial information, the auditor's perspective and "attitude," and the system for management control (Doupnik & Tsakumis, 2004). Each of these areas changes from country to country because people are affected by the roles that their nations uphold. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

An Analysis of the Obstacles of Culture, Government, and Lack of Support for International Financial Accounting Standards
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.