An Empirical Analysis of International Accounting Principles

Abstract

The relevance of the political, social, and economic environment to the development of accounting objectives, standards, principles, and practices has been a recurrent theme in the professional financial accounting literature. In his Basic Postulates of Accounting, Moonitz devoted the first chapters to a discussion of the nature of the economic and political environment in which firms operate. From this, he derived a group of accounting postulates which characterized [1961, p. 21] as . . of direct relevance to accounting ... although in form they refer to the environment. More recently, the Financial Accounting Standards Board noted in its exposure draft, Objectives of Financial Reporting and Elements of Financial Statements of Business Enterprises [1977, pp. 1-2], that accounting objectives stem from users' information needs, and these .. . needs, in turn, depend significantly on the nature of the economic activities and decisions with which the users are involved. If environmental factors play an important role in the development of accounting concepts and practices, and if these environmental factors differ significantly between countries, then it would be expected that the accounting concepts and practices in use in various countries also differ. The major objective of this study is to examine the extent to which different patterns of accounting concepts and practices exist in thirtyeight noncommunist countries and to relate these differences to the economic and social environment prevalent in those countries.