Factors affecting the Development of International Accounting

Factors affecting the Development of International Accounting

In addition there are 8 (eight) factors that influence the development of international accounting, namely:
A. Sources of funding
In countries with strong equity markets, accounting has focused on how well management runs the company (profitability), and is designed to help investors analyze the future cash flows and related risks. Instead, the credit-based system in which the bank is the main source of funding, accounting has focused on the protection of creditors through conservative accounting measurements.
2. Legal System
The western world has two basic orientations: the legal code (civil) and common law (case). In code law countries, law is a complete group that includes the provision of accounting rules and procedures that are incorporated in national law and tend to be very complete. In contrast, common law developed on a case by case basis without any attempt to cover all cases in which a complete code.
3. Taxation
In most countries, tax rules effectively set the standard because the company should record revenue and expenses in their accounts to claim it for tax purposes. While a separate tax and financial accounting, tax rules sometimes require the application of certain accounting principles.
4. Politics and Economics Association
5. Inflation
Inflation causes the distortion of historical cost accounting and affect the propensity (tendency) of a State to apply the changes to the accounts of the company.
6. Levels of Economic Development
These factors influence the types of business transactions are conducted in an economy and determine what is most important
7. Level of Education
Standard accounting practices are highly complex would be useless if misunderstood and misused. Disclosures about the risks of derivative securities will not be informative unless it is read by the competent authorities
8. Culture
Four dimensions of national culture, according to Hofstede: individualism, power distance, uncertainty avoidance, masculinity.
Four approaches to the development of accounting in Western countries with market-oriented economic system:

1) Based on the macroeconomic approach
Under this approach, obtained from the accounting practices and are designed to improve the national macroeconomic objectives. An example of Sweden.

2) Based on microeconomic approach
In this approach, accounting evolved from the principles of microeconomics. An example of the Netherlands.

3) Based on an independent approach
Under this approach, derived from accounting and business practices developed on an ad hoc, on the basis of considerations slowly, to try and error. For example the United Kingdom and the United States.

4) Based on a uniform approach
In this approach, standardized accounting and is used as a tool for administrative control by the central government. An example is the French state.

Accounting with Law General Legal Code. Accounting can also be classified in accordance with the legal system of a country.

1) Accounting in common law countries have oriented characteristics of the "fair presentation", transparency and full disclosure as well as the separation between financial and tax accounting. Accounting for common law is often referred to as the "Anglo Saxon". Accounting originated in England and then exported to countries such as Australia, Canada, Hong Kong, India, Malaysia, Pakistan and the United States.

2) accounting in code law countries have a legalistic-oriented characteristics, does not allow disclosure of the amount is less, and conformity between financial and tax accounting. Accounting code of law is often called the "continental", and is mostly found in Continental European countries and their former colonies in Africa, Asia and America.

Fair Presentation and Compliance differences Against the Law on the State of the Dominant

Differences fair presentation and compliance with law through many permasahan. This concerns the adjustments made to the application of IFRS as the basis for the presentation. Some problems include:

(1) Depreciation, where the load is determined based on the reduction in the usefulness of an asset during times of economic benefits.

(2) A lease which is substantially the purchase of fixed assets (property) treated as such (fair presentation) or treated as operating leases are common (legal compliance).

(3) Pension costs accrued at the time generated by the employee (fair presentation) paid or charged on the basis of the time you stop working (legal compliance).


Issues Important Differences Fair Presentation and Compliance Against the Law

Important issues that occur when it is about the application of IFRS basis sebagau presentation. So that the countries that have not made adjustments to the fair presentation put through his report.


The difference between fair presentation and conformity of law pose a major influence

The difference between fair presentation and conformity of law pose a major influence on many accounting issues. Accounting for common law oriented to the needs of decision-making by outside investors. Compliance with accounting laws are designed to comply with government imposed such as the calculation of taxable income or comply with the national government's economic plan. After 2005, all listed shares of European companies will use fair presentation of accounting in consolidated statements because they will be using IFRS.