FACTORS – FACTORS AFFECTING THE DEVELOPMENT OF INTERNATIONAL ACCOUNTING
According to Choi and Muller (1998: 1) That there are three major forces that drive the field of international accounting into the growing international dimension, namely (1) environmental factors, (2) The internationalization of the accounting discipline, and (3) The internationalization of the accounting profession.
Environmental Factors that Affect Development Of Accounting
Choi et. al (1998: 36) describes a number of environmental factors are believed to have a direct impact on the development of accounting, among others:
A. Legal System
Codification of standards and accounting procedures seemed natural and appropriate in countries that adhere to code law. In contrast, the formation of a non-legalistic accounting policies by the professional organizations which work in the private sector more in line with the prevailing system in common law countries (common law).
2. Political System
The existing political system in a country, too, accounting coloring, because the political system is “importing” and “export” and standards-prakti prktik accounting. For example, the existing UK accounting during the turn of the 20th Century, “exported” to the Commonwealth countries. The Netherlands did the same to the Philippines and Indonesia, France to countries in Asia da African colonies. The Germans used to influence the political sympathies, among others, accounting in Japan and Sweden.
3. The nature of Business Ownership
Public ownership is very high on the shares in U.S. corporations has resulted in the so-called Sunshine accounting disclosure standards of wide open, while the absence of public participation in the ownership of shares in French companies have limited financial communications are effective only to the communication channel “insider” course. Bank ownership is high in Germany also produces a response different accounting. In the U.S., AICPA standards make specific recommendations for certain financial and accounting practices used by non-public companies are smaller.
4. Differences in magnitude and complexity of Business Companies
Dichotomy between large and small companies continues, ranging from insurance, up to all the parent-child hierarchy, including the complexity of the problem. Large conglomerate that operates in a very diverse line of business requires financial reporting techniques that are different from small firms that produce a single product. Multinational companies are also requiring different accounting systems to accounting systems of domestic firms.
5. Social Climate
In France, leading to social responsibility reporting, whereas in Switzerland is still very conservative so large Swiss companies report their financial condition is relatively compact. The Italian is still very much oriented to the tax, even in some parts of East and South America, together with the bookkeeping and accounting is not considered socially appropriate.
6. Competency levels of Business Management and Finance Community
Competence or ability of the user business management and accounting output will largely determine the development of accounting. Because the output is as sophisticated and as powerful as any accounting, business management, and if users can not read, interpret, and understand it will not do any good.
7. Interference with a Business degree Legislature
Regulation of taxation may require certain accounting principles. As in Sweden, where certain tax concessions should be recorded in accounting before it can be claimed for tax purposes; this is also the situation for the LIFO method of inventory valuation in the U.S.. Social protection laws also affect the various accounting standards. An example is the obligation to pay severance dio several South American countries.
8. There are certain Accounting Legislation
In some cases, there are specific legislative regulations for the rules and certain accounting techniques. In the U.S., the SEC determines standards of disclosure and accounting for large companies, with reference to the FASB.
9. Speed Business Innovation
Initially, merger and acquisition activity is not taken into account in accounting, but due to the incorporation of a business that is so popular in accounting erofa force also developed to meet the needs of those concerned.
10. Economic development stage
Countries still rely on the agricultural economy requiring accounting principles that are different from the advanced industrial countries. In agricultural countries, the level of dependence on credit and long-term business contracts may still be small. So sophisticated accrual accounting is not useful and what is needed is a simple cash accounting.
11. Economic growth patterns
Stable economic conditions encourage greater competition for existing markets that require a stable pattern of accounting and will be much different in countries where conditions are experiencing a prolonged war.
12. Status of Education and Professional Organizations
In the absence of an organized professional accounting and accounting source of local authorities of a country, the standards of another area or another country may be used to fill the vacancy. Adaptation of the factors accounting from the UK is a significant environmental impact in the accounting world until the end of World War II. Since then, international adaptation process to switch to U.S. sources.