Area of discussion: International Accounting
Chapter/Keyword(s): Causes and examples of international differences
Inti International College Subang
Iqbal (2002, p.2) defines international accounting as “accounting for international transactions, comparisons of accounting principles in different countries, and harmonisation of diverse accounting standards worldwide”. Apparently, accountants from different countries produce dissimilar financial statements due to the differences in inventory valuation, assets measurement, computation of income, disclosure practices, depreciation methods, and et cetera. Eventually, this creates many problems such as difficulties in preparing group accounts and financial statements become incomparable. Most importantly, an awareness and understanding of these differences have led to impressive attempts to reduce them and hasten the global harmonisation. In addition, it helps us to justify the reasons for these variations in financial reporting in the past, why they continue in the present, and will not disappear in the future. Below is a detailed discussion on the environmental factors and national culture, which affect a country’s accounting system and contributed to the worldwide accounting diversity.
Source: Taken from http://staff.undip.ac.id/akuntansi/anis/files/2012/03/akuntansi-dan-lingkungan.pdf, p.160.
|Source: Extracted from Abdel-Karim (2011, p. 241)|
|Source: Extracted from Borker (2013, p.169)|
|Source: R. D. Nair and W. G. Frank, “The Impact of Disclosure and Measurement Practices on International Accounting Classiﬁcations,” Accounting Review (July 1980): 433.|
‘Intertemporal consistency’ means that the activities an individual plans now to carry out in the future are the activities that he or she actually carries out when the future arrives.
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