In: Accounting
Research undertaken in the country of Acirfa (the country) has revealed the following:
Accounting values model developed by Grey (1988)
Grey (1988) developed four accounting values describing the accounting subculture and linked them to Hofstede’s four organizational Cultural dimensions. Grey’s accounting value model throw light on impact of cultural values of a country on financial reporting practices followed in that country. He argues that there is a cultural dimension to the accounting values and system of each country. Social values always have influence on accounting system adopted. This can be seen in four accounting values provided by Grey.
Following are those 4 accounting values:
1. Professionalism verses statutory control:
The accounting professionals have the cultural core value and follow their ethical instinct rather than just following legal and regulatory requirement in force. They are self-derived to give free judgment and maintain self-regulatory professionalism.
Since, in the country of Acirfa, people assume their rights to participate in governance of the country, it shows their responsibility towards ethics to be maintained in their profession also. The prompt act to provide aid to the country in need shows ethical side of the people there.
2. Uniformity verses flexibility:
As per this model, emphasis is given to adopt uniform accounting practices among enterprises and to follow such practice over time rather than changing the practice according to circumstances and needs of each enterprise.
The strong culture of Acirfa of following equalitarianism and egalitarianism, fair rights for everyone and multicultural society strongly supports this model of Grey.
Its very culture does not support favourism to anyone rather than equality to all is its motto. What applies to one will apply to all. In the same way, Grey’s model also promotes equal treatment to all enterprises.
3. Conservatism verses optimism :
This model of Grey promotes adoption of cautious approach to future uncertainties. We must be prepared to cope up unseen events that may disrupt the growth and take less risk.
The conservatism approach of people of Acirfa is also similar to this model of Grey. The native people of the country are more cautious to save rather than spend to tackle unforeseen future financial crises.
4. Secrecy verses Transparency:
This model of grey does not promote much transparency to the general public or the outsiders to the enterprise rather it prefers to keep the company’s information a closed affair. The access to most of the vital information is provided only to those who are involved with its management and financial business.
This model is supported in the form of spending nature of Acirfa people.
Conclusion:
From the above discussion it is clear that the culture of country has significant influence on the accounting practice adopted in that country. the changes in culture and the cultural practice followed in a country influence its reporting requirement and information disclosure norms.
Since we found extream similarity in the cultural environment of Acirfa and the 4 models given by Gre (1988), we could say that his model would be expected to prevail in that country.