International Financial Reporting Standards For Cross...

As more business entities continue to get involved in cross-border capital investments, globalization intensifies and considerable costs are applied to the translation of financial statements prepared under different accounting standards into a comparable form. Multiple number of accounting systems exist which create these differences and accounting is the language of business created by society to present information which reveals the economic health of a company. Like any other language there are many different accounting languages used across various regions of the globe to present this information. The intensification of globalization and the resulting costs of translation have created a demand for an internationally comparable set of†¦show more content†¦For this framework culture can be thought of as the shared values of a society that influence its behavior. It is obvious significant differences in these values exist internationally, and that these differences have an overwhelming effect on all the components of society. With that being said, accounting, as a societal creation, is influenced by these significantly different values as well. Given the objective of adoption and comparability internationally, it is important to look at the effect that culture can have on the implementation of IFRS and the obstacles it presents. After a thorough examination of IFRS and the obstacles it faces because of culture, IFRS will not be able to attain its objective of international adoption and comparability any time soon. The influence of culture on international accounting standards cannot be analyzed without some sort of framework where accounting and social values can be linked. The foundation of this framework begins with the cross-cultural study of Geert Hofstede (1980; 1983). Hofstede’s study tried to distinguish significant aspects of culture that had an effect on people’s behavior in a professional capacity. He did this through a survey of people’s values across 50 different countries and three regions. Values were analyzed on the collective level and were thought to be the most