The several factors affect worldwide accounting diversity are:
1. Country 's legal System:
It is worth to be mentioned that the two type of legal system are code law; non-English-speaking countries, and common low; the English-speaking countries.
- In the code law, the corporation low or it 's called a commercial code is responsible to create the fundamental legal parameters to control the business enterprise. Corporation low also specify the financial statements should published with a required format. Under code low, the accounting low does not include many details and does not include a guidance in certain areas.
- In the common law, the specific accounting rules does not establish by governmental body, the profession or a variety of constituencies independent (nongovernmental) responsible to establish the accounting rules. Under common law, the accounting low include many develop detailed rules.
2. Taxation
Taxation effect worldwide accounting diversity because some countries "published financial statements form the basis for taxation", but other countries the financial statements are modified for tax purposes and confirmed to the government separately from the reports sent to owner of stock person.
3. Political and economic ties
Due to the political and economic links, the accounting rules will easily move between countries. For instance, England and France conveyed their accounting frameworks to several countries via previous colonialism. Also, Canada, Mexico and
Civil law focuses on laws that take care of a more private debate between individuals. Examples of civil law would be laws that deal with property and family laws. Civil law decides how the debate will settled instead of allowing the individuals to decide. Common law is laws that are decided by courts mostly when they do not fall into the civil law requirements. It is important to know if the country has civil or common law or both. They have to follow the laws of the country when doing business in this country and or another country. If doing business in another country you have to follow their rules even if they are not the same as the country your emerging market is in.
Under the Civil Law system, the laws are written and codified that the judges have to follow verbatium. Whereas, under the common law system that is followed by Australia, India and the United Kingdom, the laws are codified, doctrine of precedents is followed but the higher courts have the power to over-rule old judgements and existing law in cases where the law breaches the basic structure. (Peterson)
Common law is the system of laws, which originated and were developed in England, that are “based on court decisions, on the doctrines implicit in those decisions, and on customs and usages rather than on codified written laws” (Melvin, 2011). In other words, common law is law that is made by judges not by the legislature. It is law that is based on court precedent and it evolves over time. Statutory law, which is also referred to as statute law “is written law established by enactments
In Germany, tax law has influence strongly on accounting and financial reporting. The historical is the main reason for this linkes is between taxation and financial reporting. In 1874, the corporate income taxation has been introduced to the Commercial Code in 1862. It was convenient to link corporate income taxation to existing financial statement. Moreover, EU Directives and the forces of globalization are the two main external factors that have influence financial reporting in Germany in recent years.Even before the EU’s decision; large German companies like Daimler-Chrysler that had their shares listed on foreign stock exchanges were already using internally acceptable accounting standards.
The differences between legal rules and other kinds of rules is that criminal law refers to the consequences associated with breaking them. As the substantive law meaning that it is the law of crimes, referring that Criminal law is the code conduct that all in the society need to follow the rule, and the prohibitions on murder, assault, and burglary. Meaning that if an individual violates or commits these crimes they are going to be treated as a criminal by punishing act from the state. Civil law is refers to procedural law to follow the rule of the state from someone that has committed a crime. Which it is divided into 5 categories, for example torts, property, contract, family, and juvenile law.
Those that go into the business world quickly recognize that each work environment they find themselves in can be total different from another. This can especially be said even of environments within the United States, from region to region. There is definitely a disparity of workplace environments from country to country. Not only can culture drive a varied atmosphere, but the diversity of the personnel making up that environment can equally create a challenge that a leader must be prepared to manage. Recognizing that special care needs to be placed on communication and perception skills is crucial in our present professional domain. Managers of today need to employee tools from the psychological and sociological field to be successful. Having a deep understanding in the differences in culture and diversity in the workplace is critical, especially when debating about accepting a position overseas or assigning an employee to an embedded position abroad. With a broad knowledge of cultural differences and diversity, success as a manager and the stability of a positive work environment can be achieved and maintained without unnecessary effort and focus.
The demographics of the United States are changing at a rapid pace and consequently we are observing a “transformation in the culture and buying habits of this nation.” (Robinson, Pfeffer, & Buccigrossi, 2003)
With accounting regulations that create minimum disclosure requirements, all investors will then be equipped with same accounting information so insider information and inequity of opportunities will be reduced.
Common law - that part of the English law not embodied in legislation. It consists of rules of law based on common custom and usage and on judicial court decisions. English common law became the basis of law in the USA and many other English-speaking countries.
John F. Kennedy once said " If we cannot end now our differences, at least we can help make the world safe for diversity."
Ball, R. / Kothari, S. / Robin, A. (2000): The effect of international institutional factors on properties of accounting earnings, Journal of Accounting and Economics, Vol. 29, (2000) pp. 1-51.
A society 's social structure refers to its basic social organization. Two dimensions stand out when explaining differences between cultures. The first is the degree to which the basic unit of social organization is the individual, as opposed to
With today's workforce becoming increasingly diverse and organizations doing more to maximize the benefits of the differences in employees, organizations are relying on managers to get the people who get the job done. People have always been the central to organizations, but there strategic importance is growing in today's knowledge-based business world. An organization's success increasingly depends on the knowledge, skills, and abilities of its employees excluding there gender, age, ethnicity, and the differences in skill and abilities. When employees' talents are valuable, rare, difficult to imitate and organize, an organization can achieve an advantage. Having managers or human resource departments that are superb for
Nowadays every legal system wants to achieve justice. Different legal traditions in the world have given a different meaning of this concept by following one of the two legal systems: a civil law system and a common law system. The civil law system emerged from Roman law and throughout many centuries has been developed in continental Europe and often is called a “continental legal system”, achieving its prominence through development of aqui communitare in Europe. The common law system emerged in England during the Anglo-Saxon period and was developed by British colonies, reaching its peak in the United Kingdom and the United States of America.
The business environment appears to get smaller with each passing day. Therefore, accountants face troubles in remaining protected from the progressions that occur around the world (Diaconu and Coman 2006). Globalization hint at the regularly changing procedure of incorporation and connection among governments, individuals and organizations. The key three things that declare incorporate globalization venture, worldwide exchange and data innovation (Diaconu and Coman 2006). Globalization moves the world to another level and places it to more at the leading edge statures reliably. Outstandingly, globalization procedure have both negative and constructive effects on accounting (Godfrey and Chalmers 2007). This is unmistakable as in,