Question

Discus on the reasons why accounting regimes vary from country to country throughout the world and the factors that impact upon their ongoing development and evolution.

Answer 1

Accounting regimes vary from country to country throughout the world because the accounting system of a country is affected by a variety of historical, economic, socio-cultural, institutional, and other non – accounting factors, so it is highly unlikely for the influential factors of any two countries to be exactly the same.

Therefore, it can be logically assumed that the factors affecting the development of a country’s accounting system are also the generators of special national traits and, thus, the generators of differences between accounting systems at the international level. After all, just as countries have different histories and political and legal order or even value systems, so will their accounting systems have more or less differing development and operating model.

The factors that impact upon their ongoing development and evolution are-

1) A country’s culture,

2) Strength of the system of external sources of funding,

3) Types of business entities,

4) A country’s level of cultural independence,

5) Financial reporting system.

The actuality of international accounting harmonization issues imposes the need for consideration and detailed examination of factors that influence the development and accounting system in one country. Considering the different classification of factors mentioned above, as well as factors that are extracted or especially emphasized.

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