British Accounting Review (1989) 21, 141-158

ACCOUNTING IN DEVELOPING COUNTRIES: A CASE FOR LOCALISED UNIFORMITY

M. H. B. PERERA*
Massey University, New Zealand

1. INTRODUCTION Accounting is a product of its environment, and a particular environment is unique to its time and locality. The differences in accounting practices between countries, as highlighted over the last two decades by academic research [Mueller, 1967; 1968; Zeff, 1972; American Accounting Association (AAA), 1976a; 1976b; 1977; Choi & Mueller, 1984; Gray, Campbell & Shaw, 19841, as well as in other studies carried out by professional organisations [American Institute of Certified Public Accountants (AICPA), 1964; 19751 and international accounting firms (Price Waterhouse, 1973; 1975; 1979), have been attributed, accordingly, to a variety of environmental factors under which these practices take place. While some writers have attempted to link the identified environmental factors to national accounting practices (e.g., Seidler, 1967; Mueller, 1967; 1968; Previts, 1975; Nobes, 1983; 1984), others have sought to analyse the accounting practices of different countries with reference to a variety of economic, social, political and cultural factors (e.g., AAA, 1977; Da Costa, Bourgeois & Lawson, 1978; Frank, 1979; Nair and Frank, 1980). The former is a deductive approach, and the latter is an inductive approach to the international classification of accounting systems (Gray, 1985). Before examining the accounting environments of developing countries it is important to explain the meaning given to the term developing countries for the purpose of this discussion, as it is capable of being defined in a variety of different ways. The countries referred to here are those in the so-called Third World. The Third World refers to countries that do not belong to the Western world centred on the US, or the Eastern world with the USSR as a centre. Some writers even distinguish a Fourth world composed of the poorest countries of the world. An examination of the accounting development patterns of most developing countries reveals that they had little chance to evolve accounting systems which would truly reflect the local needs and circumstances. Their existing systems are largely extensions of those developed in other
countries, particularly the Western capitalist countries, such as the UK and US. These systems were either imposed through colonial influence or by

powerful

investors

or multinational

corporations

(Wilkinson,

1965;

* Address for correspondence: Dr M. H. B. Perera, Department Palmexxon North, New Zealand. 089(~~8939/89/020141+18 $03.00/O

of Accountancy.

Massey University,

c 1989 Academic

Press Llmitcd

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Radebaugh, 1975; Perera, 1980; Chandler & Holzer, 1984). In addition, international accounting firms have also been an important vehicle for transferring Western-style accounting to developing countries (Briston, 1978, pp. 110-l 11). Perhaps the international accounting standards promulgated by the International Accounting Standards Committee (IASC) have been the most effective in this respect, since its formation in 1973 3 (Perera, 1985, pp. 12-15). However, all the factors that have been responsible for disseminating a Western-style accounting to developing countries share one common feature, and that is the absence of any serious consideration for the needs of the recipient countries. During the British colonial period, for example, the British accounting traditions were spread to many countries which were under the British rule by a system of training the local people in those traditions so that they could be employed in managing the British business interests (e.g., Perera, 1975). The vast majority of the multinational corporations have their most significant ties to the US or UK (Seidler, 1970, p. 36). Ob viously their main concern is to make money, and they have little regard for the domestic requirements of the host countries. The major demand for international harmonisation of accounting standards came from the multinational corporations, because they saw the elimination of dissimilarities in local practices as a means to facilitate their operations [Faraz, 1974; Needles, 1976, Organisation for Economic Corporation and Development (OEDC), 1980; Nair & Frank, 19811. In short, the accounting principles and practices of Western capitalist countries were never sold to developing countries on the basis of convincing arguments in support of their superior quality in terms of local needs (Wilkinson, 1965, pp. 11-12). The purpose of the present paper is to demonstrate that: (a) the Western style of accounting practices may not be all that relevant in many developing countries; (b) as a result, they may not be capable of satisfying the accounting information needs of those countries in the most efficient manner; (c) given the circumstances prevailing in these countries, it may be necessary to regulate accounting through legislation; and (d) a uniform system of accounting formulated to suit the local needs and circumstances of individual countries may prove to be the best alternative available to these countries for improving the serviceability of accounting information. 2. AN INWARD LOOKING APPROACH

2.1. Issues of relevance Serious doubts about the relevance of the Anglo-American accounting principles and practices to developing countries have been raised in many recent studies (e.g., Scott, 1968; Briston, 1978; Samuels & Oliga, 1982;

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Perera, 1985; Hove, 1986). These doubts are generally based on such factors as the identifiable differences in business environments, business ownership structures, users of accounting information, attitudes toward disclosure, and so on. In addition, it is also likely that there will be issues concerning the transfer of accounting technology. Further, to the extent that accounting skills are culturally specific, there will be additional problems of relevance, because the culture based societal values which influence accounting in developing countries tend to be significantly different from those of Western capitalist countries (Perera, 1986). The requirements of capital markets have been a major factor for increased disclosure in financial statements in industrial countries. Therefore, the accounting principles and practices developed in the UK and US are those appropriate for countries with a large private sector and a welldeveloped capital market. Financial reporting and capital market activity in those countries are so closely related that they have become interdependent (Barret, 1977). But in many developing countries the development of an active capital market may not be a workable proposition due to various historical, economic and cultural reasons (e.g., Kaocharern, 1976, pp. 21-22). Therefore, the evolution of accounting in a developing country may have to take place in a quite different atmosphere from that which exists in Western capitalist countries. It may even be necessary to invent new methods to increase the serviceability of accounting information in the absence of a developed capital market. It is important that accounting has evolved in the West as a response to changing economic and social circumstances (e.g., AICPA, 1970, p. 43; Winjum, 1970, p. 744; Herbert, 1971, pp. 43.3-440). It is also important to realise that the economic advancement of todays developing countries will not follow the path taken by the Western capitalist countries, at least for two reasons. First, in the developing countries, there appears to be a desire to achieve more rapid development within the shortest possible time. Second, they have access to superior and more refined skills and tools such as accounting. Therefore, it is not advisable for them to adopt accounting principles and practices which are those of the Western capitalist countries when they were developing, because the environments of developing countries of the past and the skills available were different from those of the present; and since those presently existing in Western capitalist countries are appropriate to a different kind of environment, they are not only irrelevant but also may be positively harmful to developing countries in the long run, as they tend to become accepted norms and thereby preempt any possibility of changing the old, inappropriate systems and evolving new ones which are better suited to their specific needs (AAA, 1977, p. 106; Briston, 1978, p. 117).

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In any case, it has been demonstrated that the kind of financial information provided through the accounting principles and techniques adopted in Western countries is not sensitive to the changes in efficiency of enterprises (Chambers, 1973). This is important because in the case of developing countries in general, accurate indicators of financial performance of enterprises are essential for effective planning and control purposes. As Scott points out, . . . developing nations should adopt organizations of accounting which consist of adaptions of modern ways to the special conditions of todays developing nations (1968, p. 64). 2.2. Issues of competency The subject of the role of accounting in economic development has attracted increased attention of accounting researchers since the beginning of the 1960s (Winjum, 1971), due mainly to the growing concern among developing countries over the potentially useful role that accounting can play in achieving their economic development objectives. For example, the report of the Developing Countries Committee of the American Accounting Association (1973-1975) examined these issues for the first time on a formal and systematic basis. The topics covered in various other studies in this area include accounting issues of economic development; the impact of a changing economic environment on the accounting profession; issues of accounting education; the disclosure of information in financial statements; legal requirements for accounting and auditing; accounting for state enterprises; and accounting under inflationary conditions (see Perera, 1985, pp. 51-52). In a developing country, there is a need to formulate a comprehensive system which is capable of accumulating all accounting related information so that it can be used as the main data base for economic decisionmaking at various levels. Integration of the different branches of accounting, external reporting, management accounting, national income accounting, balance of payments accounting and so on, is important. Also, the idea that the public interest is best served if business enterprise accounting interrelates with national economic policies (Choi & Mueller, 1984, p. 46) has particular relevance to developing countries. Accounting can be used to ensure that macroeconomic policies and broad national economic goals are harmoniously interrelated, rather than solely to ensure the efficient functioning of capital markets. However, the experiences of Anglo-American countries may not be of much use in providing guidance in this regard. An analysis of UK and US accounting practices reveals that external reporting has tended to be emphasised to the detriment of the other areas of accounting (Scott, 1968). This probably stems from the dominant position of auditors among accountants at the early stages (Edey &

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Panitpakdi, 1956). The relatively low status given to government accounting in the UK has further encouraged the dominance of private sector auditing (Briston, 1978, p. 115). In the early stages, management accounting was very much in its infancy, and its subsequent evolution was distorted by the bias towards the provision of information for the annual report rather than with a concern for the needs of managers for decisionmaking processes (Pollard, 1968, pp. 245-290). This situation has led to doubts about the competence of Western style of accounting to satisfy the information needs of developing countries.
the primary accounting requirements of the developing nations appear to differ from those prevailing in the United States. Financial accounting itself-in the manner we practice it-in most developed countries does not appear to satisfy effectively the objectives of economic growth and development; also, management (cost) accountancy still lacks the required concepts and techniques needed in this process (Enthoven, 1967, pp. 107-120).

3. REGULATION

OF ACCOUNTING

In earlier, less complex times, it was assumed, in the countries with common-law heritage such as the UK and US, that accounting should be developed by accountants, independent of legal direction or government interference. However, today in both the UK and US, the law, particularly through taxation and capital market regulations, exerts a considerable influence on accounting. On the other hand, in countries such as France with their civil-law approach, legal prescription of accounting principles and practices has always been the rule. In most developing countries, it is highly unlikely that an accounting profession will evolve as it did in the UK and US, without strong government involvement. The conditions under which accounting operates in developing countries suggest that the reliability of financial disclosures is not likely to reach any significant level unless legal disclosure standards are set (Jaggi, 1975). Therefore, in order to be able to provide much needed professional services, the development of accounting may have to be promoted through appropriate laws and regulations. Further, accounting information is important not only to make decisions with regard to a single firm, but also to make comparisons between firms. But in the absence of specific guidelines to regulate accounting practices there would be no incentive for a single firm to conform to any particular model for the sake of comparability. It is well known that the receivers of accounting information, particularly in developing countries, are generally unsophisticated and their capacity to interpret and use it is limited. Under these circumstances, if there is no regulation, each enterprise has to explain

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the methods it has adopted in its financial statements. But the more information provided the more likelihood of the users being confused. Furthermore, regulation is also necessary to establish the credibility of accounting reports in the eyes of the public. Flexible accounting methods are at least partly responsible for the failure of financial statements to command a high level of public credibility in developing countries. It is difficult for any intelligent person to understand how it is possible for two companies in the same industry to follow entirely different accounting principles and both get true and fair view audit reports. It may be that there is even a need to reconsider the wisdom of using the concept of true and fair view as the guiding principle in financial reporting in developing countries. Accounting plans may be more important than company laws in much of the non-English speaking world. The question of what constitutes fairness, and to what extent generally accepted accounting principles in Anglo-American countries reflect fairness, have resulted in some extremely controversial issues in accounting. While attempts are being made to promote supposed fairness via disclosures, this approach is fraught with problems, particularly in the context of the developing countries. A list of differences in reporting and disclosure practices of eighteen developing countries, for example, indicates the extent of the problem [United Nations (UN), 19771. If the accounting profession is not effective in its sphere of operation, government interference to safeguard the public interest is the most natural outcome that can be expected in any country. For example, in the US, the Securities and Exchange Commission (SEC) was created by the Congress at a time when doubts were expressed about the ability of the US accounting profession to control financial reporting. The SEC has tremendous legislative authority over accounting practices adopted in the US. Under Section 19(a) of the Securities Act of 1933, the SEC can standardise accounting terminology, accounting measurements, and accounting reporting. There is ample evidence to suggest that in many developing countries the profession is not in a position to effectively regulate accounting and financial reporting, whereas there are other countries without any recognized professional organization (AAA, 1976~; 1976b). Under such circumstances, it may not be sensible to depend on professional selfregulation. Therefore, the regulation of accounting in the public interest by a government body, with the establishment of accounting principles and the supervision of their application throughout the economy as its major tasks, deserves serious consideration. Heavy government involvement in Economic activity is a common phenomenon in every developing country (Perera, 1985, pp. 63366). As a result, the government becomes an important or, in many cases, the

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most important user of accounting information, in addition to its role as the regulator of the economy. But the lack of adequate accounting in government-owned agencies and government-owned business has been highlighted in many studies (e.g., AAA, 1975; Perera, 1980). Further, the accounting standards of developing countries may have to be fashioned to achieve political objectives. Since accounting influences economic behaviour, it should be able to assist in achieving the governments economic development policies (Hawkins, 1975). This, however, is not a totally new idea, because non-Anglo-American accounting development patterns, particularly in Japan, Germany, France and the Scandinavian countries, clearly demonstrate political priorities and influences (Mueller, 1985, p. 16). In fact, there is evidence to show that these tendencies are present even in the UK and US. For example, the efforts of the US federal government to regulate oil and gas prices represents a similar situation. The energy policy and conservation act of 1975 called upon the SEC to request that the FASB develop uniform accounting principles for oil and gas companies. The unstated objective of this request was to eliminate the flexibility in GAAP, which permitted the companies to substantially evade accurate government evaluation of their financial positions and operating performance. Similarly, the appointment of the Sandilands Committee in the UK in 1974, to recommend how to deal with the effects of inflation on accounting, was said to be the result of the then governments reluctance to let CPP accounting be generally accepted because of the expected impact upon wage demands (see also, Cooper et al., 1987). The cultural orientation of many developing countries also tends to favour legislative control over accounting (Perera, 1986). It is generally held that professional managers are likely to disclose more information than the nonprofessional managers, because the former group is relatively more conscious of its social responsibility than the latter (Jain, 1966). However, business managers in many developing countries are not likely to be professionals, in the sense that majority of them are not likely to have formal education and training in management (e.g., Singhvi, 1968). The non-professional orientation of managers is likely to affect their general attitude toward the disclosure of financial information, resulting in relatively low reliability of information disclosed in financial statements. Therefore, as Jaggi (1975) suggests, an active role of governments in developing accounting principles and providing legal authority is likely to result in a higher reliability of published financial information, which may be essential for creating public confidence and trust in companies, and for creating an atmosphere where industrialisation can progress in these countries. Tweedie (1985) states that there are five genuine concerns about government control over accounting standard setting. They are, according to him:

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Firstly, such control may tend to be over-bureaucratic and be administered by those who do not have to deal either with the day-to-day practical problems of financial reporting or with developments in business which require new forms of reporting. Such bureaucracy could well lead to insensitivity to practical problems. Secondly, legislation tends to be inflexible and may fail to result in speedy action to deal with immediate reporting diffkulties, as by nature it focusses on form and not on substance. Thirdly, since compliance is mandatory for a range of enterprises, laws tend either to be broad leading to diversity in application or to be set at a minimum level. Fourthly, a transfer of standard setting from the profession to the government could well reduce the professions constant striving for improvement in practice, and leads more to a role of advocacy of certain policies on behalf of the professions clients. Fifthly, the government and its agencies are by no means immune from pressure groups and consequently may be arbitrary in their rulings especially as the nature of governments may change (p. 20).

With regard to the first concern, the assumption that government regulation of accounting is inherently bad may not be correct. For example, the close supervision by the Ministry of Finance of CPAs and the Japan Institute of CPAs serves to maintain the high quality of the profession in Japan and to support professional independence in the face of corporate resistance and in the absence of social control. It is entirely consistent with the Japanese environment and the nature of interaction between the accounting profession and business, society and government within that environment (McKinnon, 1983). There is some truth in the second, because the result of accountants responding to a legal source of accounting statements may be an emphasis on compliance rather than disclosure. However, the situation in many developing countries is that financial statements neither comply with standards nor disclose. Therefore, it would be preferable if they could be made to comply with at least certain basic standards through legal imposition. This probably is the reason why some developing countries do regard compliance with law as the main objective of financial statements, for example, Tunisia, Thailand, Kenya (AAA, 1976~; 19766). With regard to the third, contrary to what it says, one of the objectives of legislative control over accounting would be to reduce the number of alternatives available to individual enterprises. Further, it has been proved that, whatever the shortcomings which are usually attributed to a mandatory system at the more sophisticated level of accounting, it is possible to improve the overall usefulness of accounting as a source of information for economic decisionmaking. For example, in Germany there is substantial evidence to show that, as a result of introducing the new uniform accounting system, the quality of accounting was improved in smaller firms, where the work was frequently entrusted to ill-trained bookkeepers (Abel, 1971, pp. 44-45).

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The implication of the fourth concern is that government involvement is likely to weaken the accounting profession. However, in the case of developing countries, the accounting profession is already weak and relatively small, and it is exactly because of this reason that government intervention becomes necessary to safeguard public interest. Finally, on the question of who should have the authority in regulating accounting and financial reporting, neither the private sector nor the public sector will be completely immune from pressure groups. It may well be argued that the public sector is more likely to be insulated from private pressures (e.g., practicing accountants, business firms, statement users) and can therefore be more objective in setting up norms and procedures, particularly in the case of the developing countries. 5. A CASE FOR LOCALISED UNIFORMITY

5.1. Accounting and its environment Although the developing countries share certain common characteristics, they are not a homogeneous group in terms of their levels of accounting development. For example, while some countries have well-established accounting professions, there are others which do not even have a professional organisation for accountants (see, also, AAA, 1977; 1978). Any decision concerning the type of accounting that is best suited to a particular country should, therefore, be based on the circumstances prevailing in that country. A systematic attempt at improving the quality of accounting in a developing country would require research studies to accurately determine a countrys particular accounting needs, and the role of accounting in the countrys economic development process. This is important because in the majority of developing countries, there is a lack of awareness of the potential contribution that accounting could make in the economic development effort (Needles, 1976; Mirghani, 1982). Such research may ideally lead to the formulation of an accounting development plan which would include such matters as the objectives of financial statements, education and training for accountants at various levels, and so on. It is interesting that some developing countries such as Sri Lanka (Briston, 1978), Tanzania and Zambia (Enthoven, 1976, p. 135) h ave taken positive steps in this direction. Further, the main part of the 1978 AAA study was also a country by country appraisal of specific accounting needs of five countries, i.e., Egypt, Malaysia, Mexico, Pakistan and Tanzania (AAA, 1978). 5.2. Accounting objectives One of the fundamental objectives of financial statements is the satisfaction of the needs of users. Financial reports may be prepared for a variety of

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users and for a variety of purposes. For example, The Corporate Report (UK) [Accounting Standards Steering Committee (ASCC), 19751 and the Corporate Reporting: Its Future Evolution (Canada) [Canadian Institute of Chartered Accountants (CICA), 19801 both have identified a number of different categories of users. Since these user categories hold good for all countries including developing countries, any difference in the objectives of financial reporting between developing and industrialised countries should arise from the relative level of influence of particular user groups. As Oni says, . . . the key to the differences in the objectives of financial reporting of the less developed and the more developed countries will be in whether the most important user groups in the less developed countries are different from their counterparts in the more developed countries (1986, p. 26). The situation in developing countries would seem to suggest that, to the extent that the accounting information needs of government differ from those of other user groups such as the investors and creditors, there will be a tendency for the objectives of financial statements in those countries to differ from those of industrialised countries. 5.3. Accounting uniformity: A logical conclusion Accounting development based on a uniform researchers in the past (e.g., Alhashim & Garner, 1978). Alhashim & Garner (1973) even identified and conditions under which uniform accounting acceptable. However, no serious attempt has yet case demonstrating that, given the circumstances oping countries, a system of uniform accounting alternative available to them.

approach has intrigued 1973; Choi & Mueller, a set of circumstances may be desirable and been made to develop a prevailing in the develmay be the only viable

5.3.1. The heavier the governments involvement in economic affairs, the greater the need for accounting uniformity. In a developing country, usually the government and the planning authorities determine the direction in which the economy should expand. It is done with the help of a development plan which is characterised by a specific set of social aims and the resources to be employed to achieve those aims. The only way planning can be made effective is through the availability of adequate and reliable information to the central planners. Any plan will only be as good as the information and data on which it is based. As the efficiency and effectiveness of a governments involvement in economic affairs depend heavily on financial and other information about single enterprises and industry groups of enterprises, the more regulated or centralised the economy, the more important is the need for the

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information to be generated on a uniform basis among enterprises and hence the more integrated its enterprise accounting system is with planning requirements. 5.3.2. The more urgent the felt need for economic development by a central government, the greater the desirability of uniformity. The developing countries as a group are highly vulnerable to world economic fluctuations, and are overburdened with debt-service payments. These are some of the major factors that are responsible for their extremely low growth rates. Under these circumstances, they are compelled to design domestic policies which will achieve the maximum possible efficiency in the utilization of available resources. As a necessity, the government has taken the initiative in this process (Perera, 1985, pp. 51-66). The ideology here is that the self-regulatory competitive market system cannot be depended upon as a mechanism for efficient allocation of scarce economic resources, since this mechanism is unreliable and unpredictable in its effect. It can also be very slow in its progress. The accounting reports are the devices used to express actual and planned operations and to inform the central government of the operations of enterprises in the country. For these reports to be as useful as possible to a central government, a certain degree of uniformity is required, because only then can they be used as a basis for comparison between different enterprises to find out which are lagging in efficiency and productivity. When similar situations are reported in a similar fashion, the results will be directly comparable. Any difference in reported results will not be due to the accounting methods used. This explains why there is a tendency toward more uniformity wherever the government of a country feels the need for economic development (e.g., Germany, France and Egypt). Taiwan introduced a uniform accounting system for state-owned enterprises in 1969 for similar reasons (Tang & Lim, 1984). 5.3.3. The lower the level of accounting education in a country in comparison with industrialised countries, the greater the need for uniformity. The deficiencies in accounting education and training in developing countries are fairly well known (e.g., AAA, 1977; 1978; Chandler & Holzer, 1984, pp. 6162). If the level of accounting education is low in a given country, it cannot be expected that accountants would exercise mature judgements in accounting matters. In such a situation the central government of that country has to take the initiative in applying acceptable standards of accounting practices in the country. This can be done through the adoption of accounting uniformity (Alhashim & Garner, 1973). This may be an explanation as to why some developing countries, such as

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Tunisia, Thailand and Kenya (AAA, 1977), regard compliance with the law as the main objective of financial statements. Furthermore, in a country where there is a shortage of skilled accounting personnel, a mandatory system would help improve the overall usefulness of accounting information, whatever the shortcomings that might be attributed to such a system at the more sophisticated level of accounting. In addition, increased uniformity will make the accountants job much easier, because choosing an accounting method may be time consuming, difficult and contentious. 5.3.4. The less the availability of trained management, the greater the need for uniformity. Trained management is one of the key elements which lead the way to economic development in many countries (Seiler, 1966, p. 654). However, even a trained management cannot function effectively without an accounting system to supply the information needed for making various decisions. Inadequately trained management, a feature common to many developing countries, may have a greater prospect of success if a welldesigned accounting information system were officially endorsed and uniformly adopted. 5.3.5. The lower the professional status of accountants, the more important is the reason for uniformity to protect the general society. If accountants are placed at a prestigious professional level in a society, a substantial degree of tolerance will be shown toward diversity in accounting practices, because there will be a minimum of doubt as to the honesty and integrity of these accountants and the role they play in the society. In return, accountants too accept this responsibility and may set up procedures to monitor the actions of individual practitioners in order to maintain the high reputation of the profession. In this case there is no reason for the people to feel that their interests are in jeopardy. However, if, in a society, accounting is not regarded as a profession of high public esteem, and accountants are not trusted for their honesty and integrity, then accounting uniformity may seem to be a better alternative for the protection of that society. Of the two situations described above, many developing countries seem to fit into the latter. For example, the decisionmaking authority of the accounting profession in Thailand with respect to the promulgation of accounting standards is very little (AAA, 1977; Choi, 1979); accounting is not even recognised as a profession and has a low status in society in Peru (Elliot, 1968; Radebaugh, 1975); and there are no general statements of professional performance and competence for Turkish accountants, and consequently the profession is faced with a credibility problem (Var, 1976).

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5.3.6. The culture-based societal values and accounting uniformity. There seem to be identifiable differences between industrialised and developing countries in terms of their cultural orientations. For example, the former are highly individualistically oriented while the latter are highly collectivistically oriented (Hofstede, 1983). The cultural orientations of most developing countries are such that their societal values would seem to favour uniformity. 5.3.6.1. The more the members of a society identify their own interests with the interest of the society, the greater the acceptability of uniformity. This refers to the degree of integration a society maintains among its members, or the relations between an individual and his/her fellow individuals. According to Hofstede (1983), individualism stands for a preference for a loosely knit social framework in society wherein individuals are supposed to take care of themselves and their immediate families only, and collectivism stands for a preference for a tightly knit social framework in which individuals can expect their relatives or other in-group to look after them in exchange for unquestioning loyalty. Hofstede concludes that the degree of individualism in a country is statistically related to that countrys wealth (1983, p. 80). Accordingly, wealthy countries tend to be more individualisticly oriented whereas poor countries tend to be more collectivisticly oriented. This would mean that, unlike the people in the industrialised countries, the people in the developing countries tend to identify their own interests with the interests of the society, indicating a greater acceptability of uniformity. 5.3.6.2. The larger the power distance in a society, the greater the acceptability of uniformity. The power distance dimension relates to the extent to which the members of a society accept that power in institutions and organisations is distributed unequally. Hofstede identifies a global relationship between power distance and collectivism (1983, p. 82), and concludes that collectivist countries always show large power distances. Accordingly, the developing countries, being collectivistically oriented, can be categorised as large power distance societies. In such a society, people tend to accept a hierarchical order in which everybody has a place which needs no further justification, whereas in small power distance societies people would tend to strive for power equalisation and demand justification for power inequalities. In other words, large power distance has a negative relationship to the degree of individualism in a society, and this in turn would indicate positive relationship to the degree of acceptability of uniform systems and procedures. For accounting, this would mean greater acceptability for: (a) more authority for accounting systems; (b) stronger force of application of accounting rules and procedures; (c) greater use of

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a given set of measurement rules; and (d) greater emphasis placed on compliance as against disclosure (Gray, 1985).

6. CONCLUSION The need for an inward looking approach to accounting in developing countries arises mainly from two reasons. First, the Anglo-American style of accounting practices may not be relevant in many developing countries. Second, they may not be capable of providing the accounting information needs of these countries in the most efficient manner. It is also clear that the concept of uniformity in accounting, which entails the maintenance of uniform accounting practices between enterprises and the consistent use of such practices over time, as opposed to flexibility in accordance with the perceived circumstances of individual enterprises, deserves serious consideration in the case of the developing countries. On the one hand, uniform accounting would seem to improve the serviceability of accounting as a source of information in achieving the specific objectives in these countries, and on the other hand, the environmental factors would also seem to indicate that such a system would be both desirable and preferable.

NOTES
1. The term accounting practices is used here in the sense defined by the American Institute of Certified Public Accountants which says, No attempt is made here to distinguish between principles, practices and methods. The term practices is generally used to include all these. It is also used with regard to presentation, classiftcation and disclosure of items in financial statements (AICPA, 1964, p. 22).

REFERENCES
Abdeen, A. (1980). The role of accounting in project evaluation and control: The Syrian experience, InternationalJournal of Accounting Education and Research, Spring. Abel, R. (1971). The impact of environment on accounting practices: Germany in the Thirties, International Journal of Accounting Education and Research, Fall. Accounting Standards Steering Committee (1975). The Corporate Report. London: Institute of Chartered Accountants. Alhashim, D. D. & Gamer, S. P. (1973). Postulates for localized uniformity in accounting, Abacus, June, pp. 62-72.

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