Question

Abdullah completed his higher education in Accountancy from abroad. After his graduation, Abdullah joined a professional company as a trainee. During his one-year training, he gained practical knowledge by working with professionals and interacting with many other companies, attending workshops and seminars. To serve his homeland and community, he comes back to Oman and gets appointed by Multinational Telecom Industry in Oman as senior financial officer.

During his job, he has observed that accounting practices are being influenced by different systems in different companies across the globe. It makes Abdullah concerned that a multinational company follows one particular practice in one region and the same company adopts different practice in other region. Abdullah knows that accountancy is a profession that is institutionally controlled and highly self-regulated with professional standards.

a. Accountancy is one of the oldest and most established professional services, and has been identified as a growing sector of developing economies. Being an accounting student, in your opinion, why a company’s accounting practices are influenced and follow different protocols in various countries? What could be the possible reasons, explain it with suitable examples.

b. Accounting system has evolved with the passage of time. Early accounting used to record the financial activities and presently, accounting not only does the same but also provides useful information to users. How would legal, social and economic environment will affect the accounting system among Telecom companies in Oman?

Your answer should be around 400 words for each question.

Answer 1

A. Yes, a company's accounting practices can be diffrent in diffrent countries. One nation's accounting rules cannot be accepted as universal rules for accounting. Various mutinational companies has to follw thier accounting as per the respective country's accounting practice.

Diffrent countries has diffrent Laws and Regulation. The most influencing factor for company's diffrent accounting policies in diffrent countries is the country's Laws and Regulation. Laws and Regulation are not same for every country. Every country has its Taxation laws and Company Law etc. For example India has Income Tax Law for company's earnings and Goods and Service tax for company's sales. Also india has compaines act 2013 for regulating companies. A company has to follow all the Laws and Regulation of that country in which it wants to survive. Every country has its regular accounting policies so companies has to follw these regular accounting policies because these are the common accounting practice in that country so it is easy to understable for stakeholdes and other wanted persons.

A company may have to follw diffrent revenue recognition policy. For exapmle in America it has to follw marcentile system for revenue recognitin and in india it has to follw Cash system for revenue recognition. Same there may be labor laws in some countries so companies has to follow its accounts as per Labor laws.

Now a days, in india IND-AS are followed for the Accounting and other countries international AS are followed.

for example, Some Country may Follw SAP accounting software and some country may follwTALLY, ORACLE acoounting software.

So we can say, A country may have diffrent accounting practices in diffrent countries.

B. Accounting system has evolved with the passage of time. Early accounting used to record the financial activities and presently, accounting not only does the same but also provides useful information to users. Accounting System merely not the system for recording of transactions of a company, it is the way of presenting the a company's actual position or performance to its stakeholders, promoters and regulatory bodies.

Accounting system in telecom companies in oman is mostly affected by three factors i.e. Legal, social and economic enviornment. Legal Enviornment affects the company's accounting system for calculating accurate taxation and statutory dues. So Comapanies have to follw rules for accounting for calaculating accurate taxes and statutory dues. Legal enviornment also includes monitoring company's performance, to check whether it is per prescribed laws and it is breaches the standard set by government bodies.

Social factor includes Society i.e. consumer/coustomer/stakeholders. A company have to work accorading to society's needs. Society, in which company is operate,is most important factor for every company. Company needs to follw accounting system which can be easily understable for its stakeholders and consumers. If Accounts of a company are properly maintaind then it shows a possitive towards the society and stakeholders.

Economic factor includes the Ecnomic environment of comapnies in same business and economic environment of country. Every company have to follw its accounting system as per other companies in same business, So its easy to comapre the company 's performance with its competiotors. So every telecom company have to follw same accounting system.