THE WORLD OF ACCOUNTING
Accounting is more than a way to organize financial figures. The goals of a nation and the aspiration of a people influence the structure of an accounting system. There is divergence and variety in the world's accounting systems because there is divergence and variety in the world's cultures. A manager who fails to appreciate this point may assume that the financial statements of a company operating in another nation are in accordance with the accounting system that he or she is familiar with--a dangerous assumption. Without appreciating these differences, a manager might misinterpret the financial statements, and in so doing, distort his or her evaluation of an overseas operation.
The principal accounting systems found around the world are surveyed here in terms of historic development of companies and accounting systems, qualifications of practitioners, professional societies, procedures for changing accounting standards, major influences on setting accounting guidelines, and publishing financial reports including public attitudes on the role of business in society.
The United Kingdom was the world's first industrial nation and was the first to apply accounting to the modern manufacturing company. These practices spread throughout the British Empire. The historic role played by the United Kingdom in the development of accounting principles for modern corporations, and the promulgation of these principles throughout much, although not all, of the world, is also the foundation of a global accounting system.
Companies are formed in the United Kingdom under the auspices of various Companies Acts, which deal with the incorporation, management, administration, and dissolution of companies. Although it is possible to organize an un