Grays Accounting Values

The following sample essay on “Grays Accounting Values”:discussing global harmonistic of financial reporting standards.

Sidney Gray created a model that shows a link to the cultural dimensions on a country and the financial reporting rules and practices In a particular country. In short, It states that the cultural values shared by members off society will Influence the accounting values of the accounting subculture. Then, the shared values of the accounting subculture will In turn affect the financial reporting rules and practices found within a country.

Using this model, some Implications arise when discussing global harmonistic of financial reporting standards.

By looking at Grays model it’s easy to see why harmonistic Is very difficult to achieve since different cultural dimensions will lead to different standards. Different nations have entirely separate sets of values so some countries might be offended that they have to change their standards to comply with the harmonistic rules. Gray hypothesizes that the higher a country ranks on uncertainty avoidance and long-term orientation, and the lower it ranks in terms of individualism and masculinity, then the more likely it is to ranks in terms of conservatism.

This brings up the point that some countries are more conservative than others due to what they use the financial for and how much transparency they deem necessary. There is also an argument based on Gravy’s model that states that the cultural dimensions of a country lead to how the accountants apply the financial reporting rules. This causes difficulties in creating comparability between different country financial statements due to the different values.

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Conservatism also plays a role in the accountants’ application.

Harmonistic

There is a strong positive relation expected to exist between secrecy and conservatism. Countries that require limited disclosures in financial statements, high secrecy, are expected to more strictly adhere to the notion of conservatism in the measurement of assets and liabilities. How the accountants apply the rules depend largely on the type of society they are in and what exactly the society uses the financial for. The internal auditors of Cancan Enterprises have a very difficult task In front of hem.

Based on Grays hypothesis Canada, an Anglo country, would rank relatively low on the accounting values of conservatism and secrecy. Brazil ranks In the middle In uncertainty avoidance, Individualism, and masculinity. It does however rank very high In long-term orientation. This shows that Brazil Is maybe slightly more towards the conservative side. Korea ranks high In both the uncertainty avoidance and long- term orientation, while ranking lower In Individualism and masculinity.

This Is wowing that Korea Is a country that would take a more cautious approach to standards. Sweden ranks lows on both uncertainty avoidance and masculinity. It also ranks high in individualism and long-term orientation. It appears from this that Sweden would De a little less conservative. By Just using Grays model It can De seen that all the countries have different cultural dimensions so it will be difficult to implement Canadian standards on all of them. Also, language barriers and different cultural customs will add difficulties to the auditors.