Influence of Culture on Accounting Essay Example | Topics and Well Written Essays - 2250 words

Influence of Culture on Accounting - Essay Example Uniform implementation of International Accounting Standards is taking a long time mainly for this reason. The concerns and constraints of each country are different and most of the countries have well developed accounting norms and standards which they feel are quite adequate for their needs. It is another story that a reader from an alien culture might find the accounts presentation style too elaborate or too brief Dieter Ordelheide (2004 p.269) states that accounting is a social institution. He further states that Accounting is concerned with nothing less than the conceptualization of capital, its concrete expression in numbers, as well as its budgeting and monitoring, and thus with a societal institution that is so central to our economic system that it has given it its name. We might talk of global and market driven economies, the ways and means of determining the income or assets are the core of the entire financial and economic set up. Each cultural group uses these to tray and better their financial position within the culture they belong to. "Professionalism versus Statutory Control-a preference for the exercise of individual professional judgment and the maintenance of professional self-regulation as opposed to compliance with prescriptive level requirements and statutory control. Uniformity versus Flexibility-a preference for the enforcement of uniform accounting practices between companies and for the consistent use of such practices over time as opposed to flexibility in accordance with the perceived circumstances of individual companies. Conservatism versus Optimism-a preference for a cautious approach to measurement so as to cope with the uncertainty of future events as opposed to a more optimistic, laissez-faire, risk-taking approach. Secrecy versus Transparency-a preference for confidentiality and the restriction of disclosure of information about the business only to those who are closely involved with its management and financing as opposed to a more transparent, open, and publicly accountable approach." Thus as per this hypothesis each of these conflicting factors have influenced the development of the accounting standards depending upon their prevalence and dominance in the cultures being referred to. To take the example of Greek economy where the businesses tend to be closely held and public participation is indirect at its best mainly in the form of lending by banks, the need for disclosure or window dressing balance sheets is negligent. So the accounting systems which developed were fairly simple such that the limited number of stakeholders can understand the basic numbers. Of course with integration within the EU the disclosure norms have become more complex still not as complex at other developed countries say USA or Canada. In Greece one suspects that the tax bureaucrats have had a strong hand in dictating the shape of accounting conventions which are still followed. The Greek business houses being closely held tend to be wary of disclosing information to competitors so it is uncommon to see segment

Case study Research Paper Example | Topics and Well Written Essays - 2000 words

Case study - Research Paper Example ng to firing of Ron Johnson, CEO within the first 17 months of operation the company is disturbed by trying to reorganize as it strives to remain relevant which has not been very easy. The company has been in operational for over 100 years. Its YOY revenues showed a 12% decline from USD 3.02 billion in 2012 to USD 2.66 billion in 2Q2013. The reason behind the declining trend is pegged on an unsuccessful strategy to change the business model. The company attempted to replace frequent discounts and promotions that were being offered and this was immediately followed by sharp lower sales, job cuts and high cash burns (Gilbertson, Mark & Daniel 142). The company default probability has sharply risen based on its weaker operating performance. The year probability of default rose to 8.5% from 0.4% in October 2012 showing a 2000% rise. JC Penny is ranked top as the riskiest Company based on the comparison of its 8.5% EDF measure that is calculated to be 101 times the median of the USD department Stores industry sector. This increase in the Company’s one year EDF is attached to the increases in financial risk or market leverage and its business risks also referred to as asset volatility (Gilbertson, Mark & Daniel 156). Its market leverage is analyzed to have more than doubled in the previous years with current figure estimated to be 69.2% which further affirms its riskiness. The failed attempted transformation of the model by the then company CEO, Johnson resulted into a sudden rise in business risks. The firm’s asset volatility rose to 24.4% from 19.5% between 2013 April and July 2012. From the IFE chart above we realize that the company scores about 2.52 which is almost the normal average requirement of 2.50. This means that the company is internal position is not good because it ought to have above the average (Gilbertson, Claudia, Mark, and Daniel 91). This further retaliate the earlier revelation by the growth ratios that the J.C Company is heading for bad