Development and Causes of International Accounting Differences
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Development and Causes of International Accounting Differences
International accounting:
Accounting for international transactions, comparisons of accounting principles in different countries, and harmonisation of diverse standards world-wide.

Factors Influencing the Development of Accounting and Disclosure in a Global Economy
Corporations as legal entities
The recognition of corporations as separate legal entities with public share ownership in the UK and US has been highly influential in the development of accounting and disclosure to protect the creditors and investors. The information helps creditors to evaluate whether to give the corporations credit and help protect shareholders who do not participate in the day to day running of the corporation. The accountability to shareholders and creditors has also been influenced by the growth of professional management and emergence of securities markets.

Professional management
The separation of ownership from control resulted in the emergence of professional managers whose position and power within corporations stemmed from their possession of administrative and or technical skills rather than ownership of corporations capital. The size and complexity of business are the basis for growth in importance in management. In many countries (e.g. Italy, Greece, Switzerland) most businesses are still family owned. Concern over the conflict of interest when the business is managed by managers rather than owners is a good reason for expanding accounting information disclosure.

Securities Markets
A major factor influencing accounting was the emergence of stock markets which have their origins in the desire of shareholders to trade their investments without liquidating the company, and need for a mechanism to raise new finance. The growth of stock exchanges necessitated the expansion of information availability to a wider audience. Financial analysts as specialist interpret the information on behalf of current and potential shareholders. Their demand for information acted as a catalyst for further disclosure of information. The predominant influence of securities market and their regulatory bodies in determining the quality and quantity of information of publicly available information in corporate reports is reflected in the correlation between well developed markets and the degree of financial disclosure in corporate reports.

Wider audience
In recent years there has been a growing acknowledgement that companies should disclose information not only to those with direct financial interest such as investors and creditors but also to a wider audience such as employees the public etc. One of the reasons is the development and growth of influence of trade unions and employees in most developed countries. Further, there is growing public concern about the impact of corporations on externalities (e.g. pollution of the environment and the influence of large corporations on national economic social policies).

Causes of international differences in accounting systems
Cultural attitudes
Cultural attitudes have an impact on the nature of accounting systems in that some countries e.g. the Japanese and Swiss are regarded as secretive as opposed to the Americans and British who are transparent. One would expect more voluntary disclosure in annual reports of companies based in a transparent culture rather than a secretive culture.

Legal systems
Some countries have what is called common law e.g. UK and some “codified law” e.g. German and France.

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Causes Of International Accounting Differences And Recent Years. (June 16, 2021). Retrieved from https://www.freeessays.education/causes-of-international-accounting-differences-and-recent-years-essay/