Question

How do cultural values impact accounting?

Answer 1

The cultural impact on accounting disclosures can be analysed as under:

Local companies:They disclose the type of information that is viewed as necessary within their local culture and not necessarily the information that may be demanded by foreigners. The reason for this is that companies want their financial statements to speak the “accounting language” of their home culture, which is not necessarily identical to the rest of the world. These companies derive their resources locally so they want their financial statements and disclosures to meet those demands.

International companies: They are more willing to disclose the information that is necessary in the global market rather than their home culture as this is where their resources are obtainefd.Similarly to local companies,international companies want their financial statements to speak the “global accounting language” by providing more information to meet the wide variety of demands.However, international companies that try to speak this language still have a flavor of their local culture found throughout their financial statements .

Conclusion:Therefore, the basic accounting practices that seem to follow the same or similar standards can actually vary quite differently depending on the culture in which it is performed. Accountants and financial statement users must be wary of such fact when making financial decisions based on a company’s completed financial statements. This will give those users a greater advantage as they do not only understand the apparent numbers and information but also the undisclosed culture that underlies those statements.