Question

identify and summarize two different articles about the impact of culture on any dimension of accounting (e.g., financial reporting, IFRS implementation, performance evaluation, auditing

Answer 1

Answer

Gray’s model implies that our cultural dimension shape our accounting values. If so, the financial reporting rules will differ across countries since they will be shaped by different cultural values. Since financial reporting rules and practices are heavily influenced by its culture and if these cultural values do not change notably over time, this will be a hard obstacle to overcome for global convergence of financial reporting standards.

Even if all countries were to decide to harmonize their financial reporting standards, cultural differences could still lead to different implementations of those rules since different cultures may perceive certain financial reporting standards differently. For example, depending on the countries level of conservatism, certain financial reporting standards which would include judgment or estimation such as bad debt, warranty estimation, even revenue recognition, may be perceived very differently.

A highly conservative country may implement these standards very strictly while a country with lower levels of conservatism may act more loosely on these exact standards.

Similarly, what Cancan Enterprises Inc. has to keep in mind while applying Canadian GAAP worldwide is that these three countries might have different understanding of these same principals due to cultural biases. Most likely, Swedish accountants are less conservative than the accountants in Brazil and Korea and as such, there is a possibility that they will apply these same principals differently. Because of this, internal auditors need to be sent over to evaluate whether these biases are affecting the application of the Canadian’s GAAP. This will insure that these principals are followed with equal interpretation and that no mistakes are being made due to cultural biases.