Culture And Accountancy

In 1980, a commentator named Hofstede defined culture as the collective programming of the mind that distinguishes the members of one human group from another. He likened the cultures of the world to the operating systems that let us use our computers. Computer operating systems contain sets of rules that act as a point of reference. In this way, culture includes a set of societal values that drive institutional form and practice. If this is true, then culture has an impact on how countries form their legal systems, political systems, capital markets, and other substructures. If, such as we apply this to Accounting then you can bet that accountants from Ireland hold different accounting practices and norms than their accountant counterparts in England, or America. Sometimes, culture in one country is so diverse that differences in how accountants practice their profession vary from one region to another. As accounting is a profession which allows for professional judgment, we can assume that accountants in Cork behave differently from accountants in, say, Dublin.

Hofstede then studied over one hundred thousand employees from IBM in 30 countries, which led him to define, for him, four basic dimensions of culture. The first dimension is individualism vs. collectivism which addresses the degree of interdependence that a particular society maintains among its people. The second is large vs. small power distance. Power distance refers to the extent to which members of a society accept that power in institutions and organizations distributed unequally. This dimension of culture according to Hofstede addresses how society handles inequalities when it occurs among its people. The third dimension is strong vs. weak uncertainty avoidance which is the degree to which the members of society feel uncomfortable with uncertainty: how a society reacts to the fact the future is unknown, and whether it tries to control the future or lets it happen. The last dimension is masculinity vs. femininity which measures a society's preference for achievement, heroism, material success (which are masculine traits) and for relationships, modesty, caring and quality of life (which are feminine traits).
Researchers have then used these cultural differences to explain international differences in the behavior of accountants and to some extent, the nature of the accounting system in their country. For example, researchers suggest that a country with high uncertainty avoidance and low individualism will be more likely to show conservative measurement of income, and may prefer to limit disclosure only to those closely involved in the business. Researchers have then come up with other dimensions with which to measure accounting values, such as professionalism vs. statutory control, uniformity vs. flexibility, conservatism vs. optimism, and secrecy vs. transparency.

What does this all mean? For accounting firms and accountants, it means that they can look to accounting practices of other areas if they want to improve and develop other ways of doing things. For customers, it means that they can adjust their expectations depending on who they hire and where they are from. This leads to more options for both ends, which, in the end, can only be a good thing.

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