Societal Values And Culture Affect A Company 's Accounting System

meaning and provide them with rules for behavior in their organization, however culture does not necessarily imply uniformity of values. Often different values can be displayed by people of the same culture.

In the course of history and as per the needs and complexity of financial system, almost each and every country in the world developed their own accounting principles and financial reporting system in accordance to their rule, law, culture and social order. However, as the world moves more toward globalization, world market economy get close to each other, International investments spread out throughout the globe especially among countries with open economy. Thus, the diversity in accounting practices is not conducive for boosting international investments, and businesses in today’s market. For example, guess you invest in the international market and you are required to prepare a financial report in compliance with rule of that country and then you need to convert the report to where your company is originally resident. First of all, it is a hassle for the investing companies to report based on the host country rule and regulation. Second, it creates a lot extra costs which fall on investors to compare the result of the report with different countries and may not be able to make a good comparison anyway. Thus, it limited the effectiveness of the international capital markets as well as cross border investment. (International Accounting Pg, 65)

“Culture consists of the symbols, rituals, language, and social dramas that highlight organizational life, including myths, stories, and jargon. It includes the shared meanings associated with the symbols, rituals, and language. Culture combines the philosophy of the firm with beliefs, expectations, and values shared by members. It contains the stories and myths about the company's founder and its current leading figures. Organizational culture consists of a set of shared meanings and values held by a set of members in an organization that distinguish the organization from other organizations. An organization's culture determines how it perceives and reacts to the larger environment (Becker, 1982; Schein, 1996). Culture determines the nature

This article is useful to my study because the article addresses similar problems in some aspects which I am studying in accounting theory subject. That is the management accounting innovation. The article helps me understand the reasons which will change the accounting practice could be from the inside organization where the role of accountants increase. At this point, I improve my understanding about what is the distinction between accounting history and current accounting and explaining why accounting theory needs to be changed in relation to a change in other subjects.

The continuous changes in the levels of technology in different parts of the world is being fostered by globalization (Association, 2009). This is because of the ability of countries and companies to embrace new methods of production and management strategies that led to the better results in terms of efficiency and revenue. Globalization refers to the process of sharing information on technology and methods of management among people in different countries (Pollack & Adler, 2014). This process has been vital in determining development and production in different countries around the world. It is therefore important for companies to adopt and embrace new technology so as to maximize their output and perform at optimum levels. An example of

Accounting is specifically “a system by which economic information is identified, recorded, summarized and reported for the use of decision makers”; however, accounting involves interpretation and analyzing of all financial information, including taxing, personal financial information and investment (Alba, Bathija, & Thonton, 2005). Accounting is defined as the language of business, in that it specifically records the financial data that is required for businesses to operate both efficiently and effectively. Modern accounting includes

Firstly, we have to understand what is culture? Culture can be describe as collective programming of the mind, which distinguishes the members of one human group from another. Culture in this sense includes systems of values. (Hofstede, 1984) Culture in a simpler way is the "pervasive and shared beliefs, norms, and values that guide the everyday life of a group." (Cullen, 2010) National, Business, Occupational and Organisational are the different levels of cultures that are encountered by firms regardless of dealing and trading in their own country or expanding into another. Business culture though, is the most relevant out of the four as it pertains to all aspects of doing business in a culture. It 's important to note of this culture as it teaches individuals the appropriate and acceptable manner of conducting business in a society. Understanding business cultures and its importance establishes the argumentative case for the need of firms to behave in accordance to those of their host countries.

Nowadays, the business world is changing at a faster and faster pace. The reasons for this faster pace are "globalization", information technology, and the faster pace in technological change. The role of IT has shifted over the last decades to become an important part of how firms manage and control their resources. As the result, IT plays a critical role in accounting. IT is the platform for accounting data and it allows certain sophisticated queries to be performed though, IT clearly plays an important role in accounting functions. The impact of IT in firms is broad and manifested in the most varied ways in the integrated systems, which includes ERP systems, internet, intranet, and so on, walk hand in hand with the firm know-how. These technologies have altered the way firms work and their accounting functions.

Decisions are made every day in the workplace that may have ethical implications. It is important to conduct business in an ethical way because those decisions may have an impact on their companies, employees, shareholders, customers, and possibly on society. As organizations integrate ethical values into their corporate culture, they will have an engaged workforce that will have higher morale, higher employee retention, and higher production. “American Management Association (AMA) executive members completed an online corporate values survey. Ethics and integrity were listed among 76% of the respondents’ company corporate values and 72% said that they were practiced most or all of the time. Yet respondents had seen unethical

As the 21st continues, the economy becomes more entrenched in globalization. A toy store business in America may have multiple suppliers from China; or an American motorcycle manufacturing business may export internationally to Europe, Australia, and Asia. As the business world grew globally, the accounting practices moved from a simple mathematical equation of debits and credits to a complex series of steps, rules, and regulations. As time passed, investors and creditors had difficulty comprehending the financial statements of global organizations, as individual countries followed various accounting

The accounting system reform cannot be stopped until it is completely accepted by foreign companies, which has a long way to go. But only if China can do so, the global trading in China can get the most benefit and the investment.( Jiashe Ge. Facing the New Century-Focusing On the Trend of Chinese Accounting.1999)

Management can and should actively manage and engage in organisational culture. This process requires clear identification and articulation of a corporate strategy, philosophy or mission. These strategies are not confined to economic goals, but there does need to be a cohesive statement about what kind of organisation the company will be; including its character, espoused values, and relationships to customers, employees, communities, and shareholders (Murphy, 1989). Commonly known as a ‘credo’ (Murphy, 1989), this strategy can be translated into a corporate code of ethics. The credo can be a general statement about the organisational values, the code of ethics should be specific, pertinent, publicized, communicated and enforced, as well as revised (Laczniak & Murphy, 1991).

Culture refers to the sum of integrated learned behavior traits shared by members of a society ADDIN EN.CITE Hofstede2001449(Hofstede, 2001)4494496Hofstede, G.Culture's Negation-Comparing values, Behaviors, Institutions, and Organization Across Nation2001USASage Publication( HYPERLINK l "_ENREF_2" o "Hofstede, 2001 #449" Hofstede, 2001). In the 19th century Edwad Tylor gave the classical definition of culture as the complex whole including; arts knowledge, morals, custom, law, beliefs and any other habits and capabilities man acquires being a member of a society ADDIN EN.CITE Ghemawat2007448(Ghemawat, 2007)44844817Ghemawat, P. Managing differences; The central challenge of global strategyHarvard Business ReviewHarvard Business Review59-688532007( HYPERLINK l "_ENREF_1" o "Ghemawat, 2007 #448" Ghemawat, 2007). This definition gives us an overall understanding that culture is obtained and observed out of interactions in the society. The international perspective of culture intimates that attributes of a given society need to be observed in business operations.

The company 's multinational strategy, and the difference in the culture of doing business in different countries would determine the extent to which it relies on such a comprehensive system of financial reporting and control. MNC may pursuit different strategy for the business units, for different reasons and thus, implies different coordination mechanisms. If the roles of the units are as marketing satellite, local innovator, they would need centralized decision-making, and intensive financial

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,