Next, the process of setting IFRS as the international accounting standard is restricted by the environment, regulation and culture of the country. Depending on its region, every country practices its own culture which eventually build the society’s behaviour. Nobes and Parker (2012, page 29) note that:
“Culture in any country contains the most basic values that an individual may hold. It affects the way that individuals would like their society to be structured and how they interact with its substructure. Accounting may be seen as one of those substructures.”
The writers also refer to Hofstede’s theory (1984. Page 83, 84) in defining and scoring the basic dimensions of culture. There are four basic dimensions of culture which are the individualism versus collectivism, large versus small power distance, strong versus weak uncertainty avoidance and masculinity versus femininity. This paper will focus on the strong versus weak uncertainty avoidance to emphasise the limitation on applying the single framework for every country. Hosftede explains that uncertainty avoidance is the magnitude of uncomfortable feeling of the society’s members when facing the uncertainty and ambiguity situations. The level of uncertainty avoidance will influence the society’s behaviour for the accounting standard. If the society has a strong uncertainty avoidance, the citizens will be intolerant towards deviant people and refuse any suggested ideas. Consequently, the country will give cold shoulder and shows passive mind set on the proposal of the single framework in accounting sector. Moreover, the process of developing a single framework for the development of accounting standard is very complicated and costly. There are too many concepts that need to be understood and the standards are too detailed. It will be a burden for the country that is still new with the accounting standards. Additionally, the cost to establish the standards is very expensive. This is because the accounting departments in the countries need to provide the cooperative trainings as well as the education to prepare the accountants and auditors for the international standards. The impact might be different depending on the economy of the countries. For the developed countries with high Gross Domestic Product (GDP), the cost might not be a problem but the poor or developing countries may face some struggle in funding those activities. Therefore, the complicated and costly factors portray the weaknesses of single framework for global adaptation. Nevertheless, the standard-setters can argue about the limitations to support the single framework for international standard. In term of the language barrier, English has already commonly known as the …show more content…
The statements above show a clear perspective that conceptual framework is beneficial as a guideline in the setting the international accounting standards. Although there are many obstacles arise along the operation of harmonising the international accounting standards, people should hold a positive view and confidence on the efforts in eliminating all the barrier. When the global standardisation is achieved, the companies can exploit the benefits of cost reduction of reporting in different reports and establish the easier way for international trading. After all, the modern economy nowadays recognises accounting as an essential infrastructural element in the business sector and crucial for finance, thus as the accounting services are delivered in an efficient procedures, it can enhance the efficiency of the rest of the economy (White,
“Culture in any country contains the most basic values that an individual may hold. It affects the way that individuals would like their society to be structured and how they interact with its substructure. Accounting may be seen as one of those substructures.”
The writers also refer to Hofstede’s theory (1984. Page 83, 84) in defining and scoring the basic dimensions of culture. There are four basic dimensions of culture which are the individualism versus collectivism, large versus small power distance, strong versus weak uncertainty avoidance and masculinity versus femininity. This paper will focus on the strong versus weak uncertainty avoidance to emphasise the limitation on applying the single framework for every country. Hosftede explains that uncertainty avoidance is the magnitude of uncomfortable feeling of the society’s members when facing the uncertainty and ambiguity situations. The level of uncertainty avoidance will influence the society’s behaviour for the accounting standard. If the society has a strong uncertainty avoidance, the citizens will be intolerant towards deviant people and refuse any suggested ideas. Consequently, the country will give cold shoulder and shows passive mind set on the proposal of the single framework in accounting sector. Moreover, the process of developing a single framework for the development of accounting standard is very complicated and costly. There are too many concepts that need to be understood and the standards are too detailed. It will be a burden for the country that is still new with the accounting standards. Additionally, the cost to establish the standards is very expensive. This is because the accounting departments in the countries need to provide the cooperative trainings as well as the education to prepare the accountants and auditors for the international standards. The impact might be different depending on the economy of the countries. For the developed countries with high Gross Domestic Product (GDP), the cost might not be a problem but the poor or developing countries may face some struggle in funding those activities. Therefore, the complicated and costly factors portray the weaknesses of single framework for global adaptation. Nevertheless, the standard-setters can argue about the limitations to support the single framework for international standard. In term of the language barrier, English has already commonly known as the …show more content…
The statements above show a clear perspective that conceptual framework is beneficial as a guideline in the setting the international accounting standards. Although there are many obstacles arise along the operation of harmonising the international accounting standards, people should hold a positive view and confidence on the efforts in eliminating all the barrier. When the global standardisation is achieved, the companies can exploit the benefits of cost reduction of reporting in different reports and establish the easier way for international trading. After all, the modern economy nowadays recognises accounting as an essential infrastructural element in the business sector and crucial for finance, thus as the accounting services are delivered in an efficient procedures, it can enhance the efficiency of the rest of the economy (White,