Running Head: ACCOUNTING STANDARDS

Accounting Standards

Institution
Students Name

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Answer to Question 1
Development of accounting has a significant impact on the development of a countrys
economy. Instead of leading to a lag in economic development of a nation, advancement in
accounting standards lead to a meaningful contribution to 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 development of major emerging economies. The reason behind this argument is
that quality financial infrastructure provides 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.

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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 exists 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 countrys
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 cultural
influence on many countries by the American culture and economy can be used as ground for
indicating that culture has a significant influence on accounting principles. Similarly, 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 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

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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. Accounting 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
this 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 Accounting 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
accounting 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 accounting practices are
concerned. All professionals and professional bodies related to business and economic
development are required to be licensed by the countrys Ministry of Commerce. The
professional bodies are not limited to accounting and this aspects gives an implication of high
level of the countrys professionalism and statutory control. It is also established that the Saudi
Arabian regulatory framework for its market securities has highly developed after the enactment

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legislations that regulate the countrys 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 countrys 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.

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References
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.