THE IMPACT OF
CULTURAL FACTORS ON THE IMPLEMENTATION OF GLOBAL ACCOUNTING STANDARDS IFRS IN
1.1 BACKGROUND TO THE STUDY
As globalization increases at a blistering pace,
more and more business entities continue to get involved in cross-border
capital investments (Napier, 2009). A considerable cost can be applied to these
types of transaction for the translation of financial statements prepared under
dissimilar accounting guidelines into a comparable form. There exist a multiple
number of accounting systems that create these dissimilarities, because
accounting is a language of business that has been created by society to
provide information as to the economic health of an entity. Similar to any
other language, varying types of “accounting language” are used across
different regions of the globe to convey this information.
The increased frequency of the resulting costs has
created a demand for an internationally comparable set of accounting standards.
The creation of the International Financial Reporting Standards (IFRS) has
tried to fulfill this demand. The desire to have comparable standards has thus
resulted in the adoption and implementation of, as well as the convergence to
IFRS (Gray, 2011).
Despite the push towards convergence of these
accounting standards, significant diversity still remains (IAS, 2011). The
resulting discussions on how to achieve worldwide accounting convergence
oftentimes only involve the differences between specific accounting standards
and how to eliminate them. However, in order to know how to eliminate
differences one must first fully understand why they occur. One major reason
for these differences is culture. Unfortunately, the role of culture is
frequently absent from this discussion, regardless of the fact that it is at
the heart of many differences that exist between one accounting system and the
However, culture can be thought of as the
collective values of a society that influence its behavior. It is no secret
that significant differences in these values exist internationally, and that
these differences have a profound effect on all elements of society.
Therefore, accounting, as a societal creation, is
influenced by these values as well. Given the goal of internationally adoption
and comparability, it is important to explore the effect that culture can have
on the implementation of IFRS. This study will present an overview through an
examination of IFRS, aspects of its implementation, and the difficulties it
faces because of culture to assess the level of implementation and adoption.
1.2 STATEMENT OF THE PROBLEM
study is aimed at investigating the impact of cultural factors on the
implementation of global accounting standards in Nigeria. The IASB has a goal
to develop a single set of principle-based global accounting standards, which
is the IFRS. Nigeria has embraced the principle-based
regime and its accounting standards have converged substantially with the IFRS.
However, research shows that accounting is influenced by the social, cultural
and political environment. It is therefore questionable whether the IFRS-based
standards can be implemented effectively in a different social and cultural
environment. The application of professional judgment is essential in order to
operate within a principle-based regime. Therefore, the question is how
effectively professional judgment can be exercised in Nigeria. Accounting
professionals from different backgrounds may reach different judgments, because
professional judgment is often influenced by cultural values.
1.3 OBJECTIVES OF THE STUDY
following are the objectives of this study:
examine the impact of cultural factors on the implementation of global
accounting standards IFRS in Nigeria.
examine the level of the implementation of global accounting standards IFRS in
identify the factors limiting the implementation of global accounting standards
IFRS in Nigeria.
1.4 RESEARCH QUESTIONS
is the impact of cultural factors on the implementation of global accounting
standards IFRS in Nigeria?
is the level of the implementation of global accounting standards IFRS in
are the factors limiting the implementation of global accounting standards IFRS
1.6 SIGNIFICANCE OF THE STUDY
following are the significance of this study:
results of this study will help educate the stakeholders in the business
sector, entrepreneurs and the general public on the impact of cultural factors
on the implementation of global accounting standards IFRS in Nigeria.
2. This research will also serve as a
resource base to other scholars and researchers interested in carrying out
further research in this field subsequently, if applied will go to an extent to
provide new explanation to the topic
1.7 SCOPE/LIMITATIONS OF THE STUDY
study will cover the level of the implementation of global accounting standards
IFRS in Nigeria and cultural differences among nations that can influence
LIMITATION OF STUDY
Financial constraint- Insufficient fund tends to impede the
efficiency of the researcher in sourcing for the relevant materials, literature
or information and in the process of data collection (internet, questionnaire
Time constraint- The researcher will simultaneously engage in this
study with other academic work. This consequently will cut down on the time
devoted for the research work.
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Deloitte. Web. 5 Mar. 2011. .
"Towards a Theory of Cultural Influence on the Development of Accounting
Systems Internationally." Abacus
(1988). Web. 5 Feb. 2011.
Christopher. "Defining Islamic Accounting: Current Issues, Past
Roots." Accounting and Tax
Periodicals (2009): 121.
2009. Web. 20 Apr. 2011.
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