Accounting in Developing Countries

Accountant

Accounting is really a service it does not matter where on the planet you’re, it’s used and practiced every single day. Going combined with the fact it does not matter where you stand it’s used, which means that you will find countless countries which use accounting some way. In my subject, I selected to pay attention to developing countries and just how they will use accounting. Searching a bit more into developing countries, I’ll later concentrate on Libya and Indonesia on the smaller sized scale.

Within America, where we are among the most complex countries on the planet, our accounting practices and standards are extremely much absolute. Although, far away that are not as developed, picking out set standards isn’t as easy. A lot of companies around the world used GAAP, but individuals that do not make use of this supply the world-wide condition in accounting of inconsistency There are lots of stuff that influence a countries’ accounting system. Accounting system orientation, stage of monetary development, social factors, education, culture, the legislation, politics, and openness towards the exterior world all greatly affect what sort of country uses accounting (Zehri). Thinking about that the developing country struggles with many of these factors, it can be determined it’s accounting procedures may take a hit inside a problem.

I selected to appear more carefully at Libya’s accounting. Libya is situated in Northern Africa and includes just six million people. Libya is among the countries left that also hasn’t adopted IFRS (Zehri). In 1923, Tax was initially introduced. At the moment Italian enterprises introduced together accountants that belongs to them, but Libya hadn’t practiced accounting at this time. Even up to 1951, when Libya grew to become independent, there have been no accounting jobs (Zakari). Libyan companies relied on other nations accounting firms, usually from Italia and also the United kingdom. Once the discovery of oil surfaced within the 1960’s, Libya acquired financial sources which were accustomed to develop business activity (Zakari). At this time, Libya made the decision to place some laws and regulations into effect. The 1953 Libyan commercial code, the 1968 tax law, the 1955 Libyan oil act, and LAAA established in 1975 counseled me produced (Laga). Libya’s accounting is affected by four key sources: statutory needs, the outcome of technology, the influence of accounting education, and alterations in their atmosphere (Zakari). In 2001, IASB required within the previous utilization of IASC which updated in becoming IFRS. Thinking about the issues Libya has developing, converting their accounting to IFRS is definitely an obstacle (Laga).

Another country I made the decision to understand more about was Indonesia. Indonesia is situated in Asia and it has greater than 250 million occupants. Indonesia was once a Nederlander colony, so early accounting was impacted by the Nederlander system. In 1954, the Accountant Designation Act was put in place, which controlled using accountant professional designation and also the public accounting services provided (Maradona). This was the initial step in the introduction of Indonesia’s accounting system. However, in 1967 there is a shift towards the U.S. System as well as in 1973 it had been finalized that Indonesian Accounting Concepts (PAI) took it’s origin from GAAP (Maradona). This shift might be greatly related to Indonesian’s economic development. Though Indonesia began to make use of this latest accounting system, it wasn’t completely exactly the same, causing more inconsistency. Indonesia uses the Indonesian Commercial Code, which “requires companies to help keep accounts concerning their liabilities and assets, and also to make a statement of balance sheet on the semi-annual basis” (Maradona). Although, it does not require certain procedures or standards when designing an account balance sheet. Today, the (DSAK) Indonesian Financial Accounting Standards Board has the legal right to set standard in accounting but is suggested through the Indonesian Financial Accounting Standards Advisory Council (DKSAK)(Maradona).

With almost 200 countries these days, it’s reliable advice that it’s almost unattainable every country to follow exactly the same standards and operations in accounting. Referencing to my examples on Libya’s and Indonesia’s accounting background, it’s apparent the factors that influence a country’s accounting cause most countries handle their accounting differently. This will make for difficulties in consistency, but clearly countries try to interact. Overall, accounting in under developed countries is different from the way the U . s . States handle’s accounting.

Laga, Masaud. “Obstacles of Adoption and Implementation of IFRS in Libya.” European Journal of economic and Financial aspects 7 (2012): n. pag. Web. 2 November. 2015.