As with countries and cities, different cultures give a whole new take on how things are run, accounting, its practices and how many employees they have are much the same. Here, we will take a look at how culture impacts accounting in various countries.
For years, China found accounting to be a kind of threat to its economy and many accountants were shipped off to re-education camps in order to minimize the “damage”. Luckily, the Chinese government has begun to adopt international accounting practices and procedures.
The major difference between China and the United States is that the Chinese government owns and controls the largest private and public firms. These firms are separated by township and village enterprises. In the public sector, China only employs between 7500 and 8000 people. However, the private sector has more than 30,000 employees.
Much of this growth is due to American companies, with branches in China.
There seems to be no greater divide in accounting practices between countries than there is between Germany and the United States. It seems that German employees have virtually no options in flexibility and are forced to work longer hours.
In addition, they are trained in a manner that does not allow any mistakes or variations in how they perform their work and complete tasks.
This is different from the United States in that, employees here are trained on general principles and are usually allowed some freedom in how they perform their work. In addition, there is much flexibility here in work hours, where there is a busy season and a slow season.
In 2004, Mexico adopted IFRS practices and many changes have taken place. Amongst the biggest of changes, IMCP (Mexican Institute of Public Accountants) no longer issues Mexican FRS. Now those responsibilities are handled by CINIF (Mexican Board for Research and Development of Financial Reporting Standards).
In addition, the names of many of their practices have changed in order to coincide with IFRS.
Spain and the United Kingdom
The UK and Spain have opted to adopt IFRS, which makes accounting practices between the two countries and the US very much the same. This is one example of how the accounting world is changing. There is no longer the issue of cultural accounting differences causing issues in calculating trade, the world’s economy, and other factors.
Adoption of IFRS
More than 100 countries throughout the world have adopted these practices, which makes trade and the world economy more stable. Those countries where the top four firms, such as Ernst & Young have branches have seen a more stable economy and better growth per capita.
IFRS allows for a single set of high quality standards, by which accounting firms, whether public or private can apply to their practices. In addition, capital lost to applying different standards is long gone for those countries that have converted to IFRS.
In addition, decision making has been simplified to a certain degree and for lack of better terminology, it’s more like comparing oranges to oranges, instead oranges to tomatoes.