Accounting is a service that no matter where in the world you are, it is used and practiced every day. Going along with the fact that no matter where you are it is used, this means that there are hundreds of countries that use accounting one way or another. For my topic, I chose to focus on developing countries and how they use accounting. Looking a little more into developing countries, buypsychedelicaustralia I will later focus on Libya and Indonesia on a smaller scale.
Here in America, where we are one of the most highly developed countries in the world, our accounting practices and standards are very much so set in stone. Although, in other countries that aren’t as developed, coming up with set standards is not as easy. Most companies throughout the world have used GAAP, but those who don’t use this provide the world-wide problem in accounting of inconsistency There are many things that influence a countries’ accounting system. Accounting system orientation, stage of economic development, social factors, education, culture, the legal system, politics, and openness to the exterior world all greatly affect the way a country uses accounting (Zehri). Considering that a developing country struggles with most of these factors, it can easily be determined that it’s accounting procedures are affected in a negative aspect.
I chose to look more closely at Libya’s accounting. Libya is located in Northern Africa and consists of just 6 million people. Libya is just one of the countries left that still has not adopted IFRS (Zehri). In 1923, Income tax was first introduced. At this time Italian enterprises brought with them accountants of their own, freepornoavis but Libya had not practiced accounting at this point. Even up until 1951, when Libya became independent, there were no accounting jobs (Zakari). Libyan businesses depended on other countries accounting firms, usually from Italy and the UK. When the discovery of oil surfaced in the 1960’s, Libya gained financial resources that were used to develop business activity (Zakari). At this point, Libya decided to put some laws into effect. The 1953 Libyan commercial code, the 1968 income tax law, the 1955 Libyan petroleum act, and LAAA established in 1975 were all created (Laga). Libya’s accounting is influenced by four key sources: statutory requirements, the impact of technology, the influence of accounting education, and changes in their environment (Zakari). In 2001, IASB took over the previous use of IASC and this updated to turn into IFRS. Considering the problems Libya has developing, foutatunisia converting their accounting to IFRS is an obstacle (Laga).
Another country I decided to learn more about was Indonesia. Indonesia is located in Asia and has more than 250 million inhabitants. Indonesia used to be a Dutch colony, so early accounting was affected by the Dutch system. In 1954, the Accountant Designation Act was put into place, which regulated the use of accountant professional designation and the public accounting services provided (Maradona). This also was the first step in the development of Indonesia’s accounting system. However, in 1967 there was a shift to the U.S. System and in 1973 it was finalized that Indonesian Accounting Principles (PAI) was based on GAAP (Maradona). This shift could be greatly attributed to Indonesian’s economic development. Though Indonesia started to Deli Larchmont NY use this new accounting system, it was not completely the same, causing more inconsistency. Indonesia uses the Indonesian Commercial Code, which “requires companies to keep accounts concerning their assets and liabilities, and to prepare a statement of balance sheet on a semi-annual basis” (Maradona). Although, it doesn’t require certain procedures or standards when creating a balance sheet. Today, the (DSAK) Indonesian Financial Accounting Standards Board has the authority to set standard in accounting but is advised by the Indonesian Financial Accounting Standards Advisory Council (DKSAK)(Maradona).
With almost 200 countries in the world today, it is safe to say that it is almost impossible to get every country to abide by the same standards and procedures in accounting. Referencing back to my examples on Libya’s and Indonesia’s accounting background, it is obvious that the factors that influence a country’s accounting cause most countries handle their accounting differently. This makes for difficulties in consistency, but obviously countries find a way to work together. streetwear All in all, accounting in third world countries differs from how the United States handle’s accounting.