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In this essay I would like to discuss how different cultures influence the
accounting practice in different countries, and explore how creative
accounting relates to culture. In 2000, Anglo-Swedish drug company
AstraZeneca reported a profit of £9,521 million under UK accounting rules and
£29,707 million under the US rules. Different sets of financial statements have
to be prepared if a company is to raise finance in more than one country, each
statements complying with the regulations of the related countries. This notion
supports my statement further on the subjectivity of profit figure.
1
These dimensions are found in a survey conducted amongst employees in fifty countries for Hoftede’s research
in 1984. Individualism is a type of social framework whereby the individuals are responsible for themselves and
their close relatives only. Power Distance on the other hand measures the extent of acceptance of how power in
institutions is distributed unequally. The third dimension, Uncertainty Avoidance relates to how people feel and
respond to risk and uncertainty while Masculine society is a ‘society that is based on individual achievement,
heroism, and material success’, (Brown, R., 2009)
Student ID: 0824174
the culture will be reflected in how they prepare the financial statements,
hence affecting the profit figure.
From the arguments presented above, I totally believe that in order for an
investor to use accounting profit as a tool to measure performance, he needs
to understand that there are many things that shape accounting information
especially the accounting regulation and profession itself, in which its
development is influenced by the culture of the company, and the country as a
whole. Culture seems to be a very significant underlying issue that is
embedded in the development of the accounting system.
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