Abstract
The objective of this study is to comprehend different practices of accounting and auditing across countries. Although over 120 countries use similar accounting and auditing standards, resulting from converging towards IFRS and ISA respectively, a difference of accounting and auditing practices still exists. It needs a comprehensive theory or analytical framework to explain such differences. Yet, there is still a limited overarching theory and comprehensive analytical framework to explain different accounting and auditing practices. Hofstede's work on culture, which is widely used in accounting and auditing research, may be useful to comprehend various accounting and auditing practices. Alternative explanations using political and economic factors are also often proposed to explain the dissimilarities. These fragmentary approaches seem to result in lack of understanding on the issue. Seeking theories or analytical tools to provide an enhanced explanation of why accounting and auditing practiced differently may be worthwhile avenues.
Highlights
Advancement in transportation and information technology has been changing the way people do business (Friedman, 2005)
Favere-Marchesi (2000)studies audit quality in ASEAN countries, where this study proposes that different legal environment, including national laws, regulations, professional codes, and standards, can affect audit quality
An analogy for differences in current practices may be similar to one language with different accents. Another argument claims that culture is not appropriate to explain differences in accounting and auditing practices (Baskerville, 2003; McSweeney, 2002; Roberts, Weetman, & Gordon, 2002)
Summary
Advancement in transportation and information technology has been changing the way people do business (Friedman, 2005). By studying differences among auditing practices in 50 countries, Bik & Hooghiemstra(2017) found that there are cultural variations in terms of auditorin-charge involvement as a proxy of audit quality among these countries They argue that despite harmonization of auditing standards and practices, the results of such process is still far from expectation. In a similar vein, Favere-Marchesi (2000)studies audit quality in ASEAN countries, where this study proposes that different legal environment, including national laws, regulations, professional codes, and standards, can affect audit quality. Another argument claims that culture is not appropriate to explain differences in accounting and auditing practices (Baskerville, 2003; McSweeney, 2002; Roberts, Weetman, & Gordon, 2002) They assert that accounting and auditing are much more affected by economic, historical, and political factors. Section two and section three discuss critics on Hofstede’s culture model and an alternative approach for differences in practices across countries, respectively
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