Development of accounting has a significant impact on the development of a country’s economy. Instead of leading to a lag in the economic development of a nation, advancement in accounting standards lead to a meaningful contribution to the economic growth of a country. Contribution of accounting development to economic development could be seen from the fact that local and international bodies of accountancy collaborate with an aim of promoting contribution to growth or success or various economies (Afterman, 1995). Much contributions of accountancy to economic development are seen from the various meetings set to establish key areas of economic development globally. An example of these meetings is a high-level meeting organized in Qatar on Accounting for Development.
In the Qatar meeting, a report was established to point out the possible capacities, global standards, integrated reporting, global standards, as well as business standards from which professional bodies could contribute to economic development through accounting standards development. in any case, it is established that well planned financial infrastructure is highly useful in aiding the development of major emerging economies. The reason behind this argument is that quality financial infrastructure provides an investor with a sense of acceptability in terms of high assurance level. Assurance becomes greater when resources used in economic development are accounted for (Alia, 2011). A combination of historical records through accounting methodologies and projections of future trends in econometrics or statistical economics brings in a perfect road for economic development. This implies that accounting has to be incorporated in economic development but the standards have to be developed to maintain pace with the prevailing technologies.
Answer to Question 2
Culture has a significant extent to its explanation on the relative importance of stock exchange as well as its explanation on professional accounting globally. In this case, a person has to establish the existing differences in cultures how these different cultures influence the accounting standards as well as the stock exchange regimes. Experts establish that there exist varying accounting behavioral patterns that are applied to various countries that apply them in groups. From this aspect of culture and difference in accounting practices, it is possible to group various countries in groups with respect to the accounting practices they employ (Afterman, 1995).
The culture of a country determines the accounting system to employ due to the country’s regulations on the accounting standards employed (Alia, 2011). Most countries in the world employ the European cultures in various aspects of life including accounting systems. The same differences come in when pointing out that some countries employ the French culture while others employ the English culture and so on. The same happens to accounting principles and in the development of accounting. The United State has its own accounting principles but the cultural influence on many countries by the American culture and economy can be used as a ground for indicating that culture has a significant influence on accounting principles. Similarly, a stock exchange is done in cultural and economic blocks. Trading in the stock market with China would call for some application of the Chinese culture or have the Chinese culture represented whether in the language of business, economic, or accountancy behavior (Alia, 2011). It follows that culture explains much on accounting development, practices, as well as playing a key role in the stock market.
Answer to Question 3
Accounting is the language of business and it is through accounting that organizations can communicate effectively about their financial position. Prospects in accounting may look at the global scope where uniformity is growing quickly with the harmonization of culture and ethnic division. it has been found to vary in standards and applicability as countries grew up in developing their own accounting standards in the recent past (Collins, 1989). While these differences in accounting principles came in within the past few years, most countries are adopting the two major accounting principles, which include the United States GAAP and the IFRS. The US Generally Accepted Principles and the International Financial Reporting Standards seem to be adopted by many countries in a great capacity. This happens with many countries wanting to be associated economically with the United States as well as wanting to do well in the global market. Most accounting professional firms that were not within the US GAAP or the IFRS are increasingly recognizing the benefits of uniform global standards (Collins, 1989). A single set of accounting standards can be used to compare the financial positions of various firms irrespective of their locations or the countries they are situated. This trend confirms that the future trend in accounting standards would be uniform and complying to the international standards of accounting.
Answer to Question 4
Saudi Arabia as a country has its own regulation as far as practices are concerned. All professionals and professional bodies related to business and economic development are required to be licensed by the country’s Ministry of Commerce. The professional bodies are not limited to accounting and these aspects gives an implication of high level of the country’s professionalism and statutory control. It is also established that the Saudi Arabian regulatory framework for its market securities has highly developed after the enactment legislations that regulate the country’s capital market (IMF Country Report No. 12/93, 2012). Regulation in Saudi Arabia extent to the accounting standard since the resolution of accounting regulations by the country’s Minister of Commerce in 1968 in which practicing accounting or auditing has to be in accordance with CPA regulations (IMF Country Report No. 12/93, 2012). The Saudi Arabian business environment is characterized by regulations and transparency in accounting despite its unique accounting principles from those of the GAAP or IFRS.
Afterman, A. B. (1995). International Accounting, Financial Reporting, and Analysis. . New York: Warren, Gorham & Lamont.
Alia, J. B. (2011, March 7). The Effect of Environmental Factors on Accounting Diversity – A Literature Review. Retrieved February 23, 2013, from papers.ssrn.com: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1780479
Collins, S. H. (1989). The Move to Globalization. Journal of Accountancy , 95-104.
IMF Country Report No. 12/93. (2012). Saudi Arabia: Reports on the Observance of Standards and Codes. IMF Country Report No. 12/93 , 1-45.
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