2. DEVELOPMENT
& INTERNATIONAL ACCOUNTING CLASSIFICATION
A.
FACTORS AFFECTING THE DEVELOPMENT OF INTERNATIONAL ACCOUNTING
In
addition there are 8 (eight) factors that influence the development of
international accounting, namely:
1. Sources of funding
1. Sources of funding
In
countries with strong equity markets, accounting has focused on how well
management runs the company (profitability), and is designed to help investors
analyze the future cash flows and related risks. Instead, the credit-based
system in which the bank is the main source of funding, accounting has focused
on the protection of creditors through conservative accounting measurements.
2. Legal System
2. Legal System
The
western world has two basic orientations: the legal code (civil) and common law
(case). In code law countries, law is a complete group that includes the
provision of accounting rules and procedures that are incorporated in national law
and tend to be very complete. In contrast, common law developed on a case
by case basis without any attempt to cover all cases in which a complete code.
3. Taxation
3. Taxation
In
most countries, tax rules effectively set the standard because the company
should record revenue and expenses in their accounts to claim it for tax
purposes. While a separate tax and financial accounting, tax rules
sometimes require the application of certain accounting principles.
4. Politics and Economics Association
5. Inflation
4. Politics and Economics Association
5. Inflation
Inflation
causes the distortion of historical cost accounting and affect the propensity
(tendency) of a State to apply the changes to the accounts of the company.
6. Levels of Economic Development
6. Levels of Economic Development
These
factors influence the types of business transactions are conducted in an
economy and determine what is most important
7. Level of Education
7. Level of Education
Standard
accounting practices are highly complex would be useless if misunderstood and
misused. Disclosures about the risks of derivative securities will not be
informative unless it is read by the competent authorities
8. Culture
8. Culture
Four
dimensions of national culture, according to Hofstede: individualism, power
distance, uncertainty avoidance, masculinity.
The
dimensions in the Accounting Practices Affecting Accounting:
1. Professionalism versus control mandatory preference to the implementation of individual professional balance and regulation of their own professional circles as compared to the compliance with legal provisions that have been determined.
2. Uniformity versus flexibility preference for uniformity and consistency than the flexibility to react to specific circumstances.
3. Conservatism versus optimism.
4. Confidentiality versus transparency preference for confidentiality and restrictions on business in accordance with the basic information need to know than the willingness to disclose information to the public.
1. Professionalism versus control mandatory preference to the implementation of individual professional balance and regulation of their own professional circles as compared to the compliance with legal provisions that have been determined.
2. Uniformity versus flexibility preference for uniformity and consistency than the flexibility to react to specific circumstances.
3. Conservatism versus optimism.
4. Confidentiality versus transparency preference for confidentiality and restrictions on business in accordance with the basic information need to know than the willingness to disclose information to the public.
B. ACCOUNTING APPROACH IN ECONOMIC DEVELOPMENT ORIENTED MARKET
Four Approaches
to the Development of Accounting
Initial classification was proposed by Mueller mid-1960s. He identified four approaches to the development of accounting in Western countries with market-oriented economic system
Initial classification was proposed by Mueller mid-1960s. He identified four approaches to the development of accounting in Western countries with market-oriented economic system
1) Based on the macroeconomic approach, derived from the accounting practices
and are designed to improve the national macroeconomic objectives. For
example, a national policy of stable employment with avoiding major changes to
the business cycle will result in a leveling prakti accounting profit. An
example of Sweden.
2) Based on microeconomic approach, developed from accounting principles microekonomi.
The focus lies on inividu company that has a purpose to survive. An example of the Netherlands.
3) Based on independent pedekatan, accounting practices derived from the business and develop an ad hoc basis, with the base slowly from consideration, trial and error, and errors. For example the United Kingdom and the United States.
4) Based on the approach of a uniform, standardized accounting and is used as a tool for administrative control by the central government. Uniformity in the measurement, disclosure, and will facilitate the presentation of the designer of government, tax authorities and even managers to use accounting information in controlling all types of businesses. An example is the French state.
Choi et. al (1998: 36) describes a number of environmental factors are believed to have a direct impact on the development of accounting, among others:
2) Based on microeconomic approach, developed from accounting principles microekonomi.
The focus lies on inividu company that has a purpose to survive. An example of the Netherlands.
3) Based on independent pedekatan, accounting practices derived from the business and develop an ad hoc basis, with the base slowly from consideration, trial and error, and errors. For example the United Kingdom and the United States.
4) Based on the approach of a uniform, standardized accounting and is used as a tool for administrative control by the central government. Uniformity in the measurement, disclosure, and will facilitate the presentation of the designer of government, tax authorities and even managers to use accounting information in controlling all types of businesses. An example is the French state.
Choi et. al (1998: 36) describes a number of environmental factors are believed to have a direct impact on the development of accounting, among others:
1. Legal System
Codification of standards and accounting procedures seemed natural and appropriate in countries that adhere to code law. In contrast, the formation of a non-legalistic accounting policies by the professional organizations which work in the private sector more in line with the prevailing system in common law countries (common law). In the law of war or other emergency situations nasonal, all aspects of accounting functions may be regulated by a court or government agency. An example is the period of Nazi Germany, when preparations for war intensified and then during World War II the national accounting system requires a very uniform to control all activities of the national economy in total.
Codification of standards and accounting procedures seemed natural and appropriate in countries that adhere to code law. In contrast, the formation of a non-legalistic accounting policies by the professional organizations which work in the private sector more in line with the prevailing system in common law countries (common law). In the law of war or other emergency situations nasonal, all aspects of accounting functions may be regulated by a court or government agency. An example is the period of Nazi Germany, when preparations for war intensified and then during World War II the national accounting system requires a very uniform to control all activities of the national economy in total.
2. Political System
The existing
political system in a country, too, accounting coloring, because the political
system is "importing" and "export" standards and accounting
practices. For example, the existing UK accounting during the turn of the
20th Century, "exported" to the Commonwealth countries. The
Netherlands did the same to the Philippines and Indonesia, France to countries
in Asia da African colonies. The Germans used to influence the political
sympathies, among others, accounting in Japan and Sweden.
3. The nature of Business Ownership
3. The nature of Business Ownership
Public ownership of
the shares of the company implies the principles of financial accounting
reporting and disclosure are different from companies whose ownership is
dominated by the family or the bank. For example, public ownership is very
high on the shares in U.S. corporations has resulted in the so-called Sunshine
accounting disclosure standards of wide open, while the absence of public participation
in the ownership of shares in French companies have limited financial
communication is effective only to the channels of communication
"insider" only. Bank ownership is high in Germany also
produces a response different accounting. In the U.S., AICPA standards
make specific recommendations for certain financial and accounting practices
used by non-public companies are smaller.
4. Differences in magnitude and complexity of Business Companies
4. Differences in magnitude and complexity of Business Companies
Dichotomy between
large and small companies continues, ranging from insurance, up to all the
parent-child hierarchy, including the complexity of the problem. Large
conglomerate that operates in a very diverse line of business requires
financial reporting techniques that are different from small firms that produce
a single product.Multinational companies are also requiring a different
accounting system accounting system with domestic firms.
5. Social Climate
5. Social Climate
Social climate also
contribute to the development of accounting in different parts of the world. In
France, leading to social responsibility reporting, whereas in Switzerland is
still very conservative so large Swiss firms to report their financial
condition is relatively compact. The Italian is still very much oriented
to the tax, even in some Eastern countries and South America, together with the
bookkeeping and accounting is not considered socially appropriate.
6. Competency levels of Business Management and Finance Community
6. Competency levels of Business Management and Finance Community
Competence or ability
of the user business management and accounting output will largely determine
the development of accounting. Because the output is as sophisticated and
as powerful as any accounting, business management, and if users can not read,
interpret, and understand it will not do any good.
7. Interference with a Business degree Legislature
7. Interference with a Business degree Legislature
Regulation of
taxation may require certain accounting principles. As in Sweden, where
certain tax concessions should be recorded in accounting before it can be
claimed for tax purposes; this is also the situation for the LIFO method of
inventory valuation in the U.S.. Social protection laws also affect the
various accounting standards. An example is the obligation to pay
severance dio several South American countries.
8. There are certain Accounting Legislation
8. There are certain Accounting Legislation
In some cases, there
are specific legislative regulations for the rules and certain accounting
techniques. In the U.S., the SEC determines standards of disclosure and
accounting for large companies, with reference to the FASB.
9. Speed Business Innovation
9. Speed Business Innovation
Initially, merger and
acquisition activity is not taken into account in accounting, but due to the
incorporation of a business that is so popular in accounting erofa force also
developed to meet the needs of those concerned.
10. Economic development stage
10. Economic development stage
Countries still rely
on the agricultural economy requiring different accounting principles in the
advanced industrial countries. In agricultural countries, the level of
dependence on credit and long-term business contracts may still be small. So
sophisticated accrual accounting is not useful and what is needed is a simple
cash accounting.
11. Economic growth patterns
11. Economic growth patterns
Stable economic
conditions encourage greater competition for existing markets that require a
stable pattern of accounting and will be much different in countries where
conditions are experiencing a prolonged war.
12. Status of Education and Professional Organizations
12. Status of Education and Professional Organizations
In the absence of an
organized professional accounting and resource
local accounting authority of a country, the standards of another area or another country may be used to fill the vacancy. English adaptation of the factors accounting is a significant environmental impact in the accounting world until the end of World War II.Since then, international adaptation process to switch to U.S. sources. Development of accounting, both from the state itself or adapted from other countries, will not succeed unless the environmental conditions such as those listed above are fully considered.
local accounting authority of a country, the standards of another area or another country may be used to fill the vacancy. English adaptation of the factors accounting is a significant environmental impact in the accounting world until the end of World War II.Since then, international adaptation process to switch to U.S. sources. Development of accounting, both from the state itself or adapted from other countries, will not succeed unless the environmental conditions such as those listed above are fully considered.
C.
STATE OF DOMINANT IN ACCOUNTING PRACTICE DEVELOPMENT
Some
countries are dominant on the development of accounting include:
(1) France
(2) Japan
(3) United States
(1) France
(2) Japan
(3) United States
In
the progress the countries France and Japan are less
dominant than the UnitedStates. It can be seen from the
development of Japanese accounting in its developmentis
currently based on existing existing IFRS.
D. CLASSIFICATION OF INTERNATIONAL ACCOUNTING
International accounting classification can
be done in two ways, namely:
(1) deductive approach
(1) deductive approach
Which identifies
the relevant environmental factors and linking it with national accountingpractices, an
international grouping or pattern of development proposed.
(2) Inductive Approach
(2) Inductive Approach
Accounting practices were
analyzed individually, the pattern of development or groupingidentified and at the
end of the explanation is made from the standpoint of
economic, social, political and other factors.
E.
REASONABLE DIFFERENCES IN PRESENTATION AND COMPLIANCE WITH THE
LAW IN THE STATE OF DOMINANT
Differences fair
presentation and compliance with law through many permasahan. This
concerns the adjustments made to the application of IFRS as
the basis for the presentation. Some problems include:
(1) Depreciation, where the load is determined based on the reduction in the usefulnessof an asset during times of economic benefits.
(2) A lease which is substantially the purchase of fixed assets (property) treated as such(fair presentation) or treated as operating leases are common (legal compliance).
(3) Pension costs accrued at the time generated by the employee (fair presentation)paid or charged on the basis of the time you stop working (legal compliance).
(1) Depreciation, where the load is determined based on the reduction in the usefulnessof an asset during times of economic benefits.
(2) A lease which is substantially the purchase of fixed assets (property) treated as such(fair presentation) or treated as operating leases are common (legal compliance).
(3) Pension costs accrued at the time generated by the employee (fair presentation)paid or charged on the basis of the time you stop working (legal compliance).
International accounting classification can
be done in two ways: By considerations andempirically.
* Approach to Development Accounting
* Approach to Development Accounting
Four approaches to
the development of accounting in Western countries with market-oriented economic
system:
1) Based on the macroeconomic approach
1) Based on the macroeconomic approach
Under
this approach, obtained from the accounting practices and are
designed toimprove the national macroeconomic objectives. An
example of Sweden.
2) Based on microeconomic approach
2) Based on microeconomic approach
In
this approach, accounting evolved from the principles of microeconomics. An
example of the Netherlands.
3) Based on an independent approach
3) Based on an independent approach
Under
this approach, derived from accounting and business practices developed on
an ad hoc, on the basis of considerations slowly, to
try and error. For example the United Kingdom and the
United States.
4) Based on a uniform approach
4) Based on a uniform approach
In
this approach, standardized accounting and is used as
a tool for administrativecontrol by the central government. An
example is the French state.
F.
IMPORTANT DIFFERENCES IN PRESENTATION ISSUES AND REASONABLECOMPLIANCE
WITH LAWS
Important
issues that occur when it is about the application of IFRS basis sebagaupresentation. So
that the countries that have not made adjustments to the fair
presentation put through his report.
The
difference between fair presentation and conformity of law pose a major influence
The
difference between fair presentation and conformity of law pose a
major influence on many accounting issues. Accounting for common law oriented
to the needs of decision-making by outside investors. Compliance
with accounting laws are designedto comply with government imposed such
as the calculation of taxable income orcomply with the
national government's economic plan. After 2005, all listed shares of
European companies will use fair presentation of
accounting in consolidatedstatements because they will
be using IFRS.
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