International financial reporting and auditing system


There are many explanatory theoretical accounts on comparative accounting analysis. A general theoretical account of the grounds for international differences in fiscal coverage ‘ developed by Nobes, C ( 1998 ) , which states that major ground for international differences in fiscal coverage is different intent for that coverage has been chosen. Toward this terminal factors such as fiscal systems, colonial heritage and fiscal coverage systems are considered as of precedence to explicate a general two category theoretical account of fiscal describing systems while factors such as revenue enhancement, degree of instruction, economic development, civilization, rising prices degrees, legal systems and other wide factors are considered secondary. Nobes farther proposed that fiscal describing systems should be divided ab initio into categories. Class A fiscal coverage belongs to Anglo-Saxon history and Class B to Continental European. Besides, he makes a suggestion to help the research worker in mensurating a system and some nucleus characteristics of the two systems as stated below.


Class A

Class B

Commissariats for depreciation and pensions

Accounting pattern differs from revenue enhancement regulations

Accounting pattern follows revenue enhancement regulations

Long term contracts

Percentage of completion method

Completed contract method

Unsettled currency additions

Taken to income

Deferred or non recognised

Legal militias

Not found


Net income and loss format

Expenses recorded by map ( e.g. , cost of gross revenues )

Expenses recorded by nature ( e.g. , entire rewards )

Cash flow statements


Not required, found merely periodically

Gaining per portion revelation

Required by listed companies

Not required, found merely periodically

Two states of Gambia and Senegal were selected and evaluated to find the extent to which a general theoretical account can be used in explicating the differences in their accounting, scrutinizing and fiscal systems.

Fiscal systems

Capital market based, in which monetary values are established in competitory markets, credit-based system: governmental, in which resources are administered by the authorities and credit-based: fiscal establishments in which Bankss and other fiscal establishments are dominant are three types of funding system harmonizing to Zysman separating it in 1983. Gambia was under the capital market based in which monetary values are established in competitory markets which makes the state have a broad scope of capital instruments and fiscal establishments and the establishments have an arm ‘s length relationship with companies and makes it possible for the investors to alter their retentions through the secondary securities markets, which are big. But Senegal belongs to recognition based system: authorities, in which resources are allocated by the authorities, in this state of affairs the capital market is smaller which make the companies to trust on whoever grant recognition which normally are the Bankss under the influence of authorities.

Fiscal describing systems

Research workers proposed ab initio to split the fiscal coverage into two categories which are category A and category B. Class A belongs to what some have called Anglo-Saxon accounting and category B to Continental European. Gambia belongs to category A because it ‘s financed by strong equity-outsider markets and do a proper revelation of information to investors and comply with international accounting criterion ( IAS ) . Besides, there is a demand for public revelation and external audit because most suppliers of finance have no engagement in direction and no private entree to fiscal information. However, Senegal belongs to equity based system where most portions are owned by insiders because of a big Numberss of listed companies and a big equity market capitalization, but portions are extensively owned by Bankss and other companies.

Colonial heritage

Gambia and Senegal are culturally dominated states utilizing an accounting system based on that of the influential state due to a really strong external influence, little size or former colonial position. Gambia was colonised by the British and utilizing Class A format in describing their accounting system while Senegal was colonised by the Gallic and belongs to Class B Continental European. Both are pattern Christianity as their major faiths.

Degree of Economic Development

Degree of economic development has no important in distinguishing fiscal describing harmonizing to Nobes. He says that many developing states have accounting systems instead like UK ‘s while some have wholly different accounting systems instead like that in France. So, the degree of economic development in Gambia and Senegal are about the same but their fiscal accounting coverage is different, even though because of geographic size and human resources in population Senegal has great potencies for development.

Legal system

Nobes makes proviso for less accent on legal system on its regulative system for accounting that it has no significance in distinguishing fiscal coverage. He says it is possible to split states into common jurisprudence system and statute legal system in which Gambia belongs to common jurisprudence system and Senegal to codified legal system, so, he suggested that there will be a dual numeration for utilizing a legal variable instead from utilizing fiscal variable. Legal systems stipulate regulative system for accounting instead than general legal system for present intent, so, the variable was measured by turn uping the beginning of the most elaborate accounting ordinances. Gambia is with a common jurisprudence systems, their accounting system was regulated by professional comptrollers while revenue enhancement governments regulate the accounting system in Senegal.


Many states have different ways of reacting to rising prices as it comes. Even though Nobes 1983 did non include rising prices as a key variable, Nobes and Parker ( 1995, p.19 ) suggested that ‘ without mention to this factor, it would be impossible to explicate accounting differences in states badly affected by it ‘ . It is nevertheless observed that comptrollers in Gambia, a category A state, as an English speech production state have proved immune to rising prices as they take actions. On the other manus in Senegal, a category B state, the fact that the authorities usually react to rising prices is an obvious mark that they regulate the pattern of accounting in this state.

Degree of Education

Nobes suggests that the degree of instruction should non be a precedence to distinguish fiscal coverage because no 1 can explicate accounting differences between UK, US and Netherlands where Class A dominates and France, Germany and Italy where Class B dominates on the footing of the instead similar degrees of third instruction and no 1 can explicate the singular similarities between accounting in Gambia, Malawi, Nigeria and Zimbabwe ( Class A states ) and the UK ( besides Class A ) on the footing of the instead third instruction. Alternatively, the point should be placed on colonial heritage. Shoentnthal, ( 1989 ) , suggest that different degree of professional accounting instruction might be relevant to fiscal coverage than the degree of instruction. Therefore, differences in degree of instruction are non important to fiscal coverage as occurred in Gambia and Senegal.

Other Relevant Factors

Some other factors might impact the differences in fiscal describing systems of both states of Senegal and Gambia for illustration ; human ecology and geographic distribution of natural resources. Gambia for illustration is a state which is 90 % situated within Senegal and many people along with their goods and services have to go through through Gambia in theodolite from one terminal to the other portion of Senegal. Gambia on her ain is a piece of land along the estuary of River Gambia with the lone piece of her district non within Senegal on the seashore of the Atlantic Ocean. Gambia ‘s major concern is chiefly sea based as fishing and other H2O based minutess are both the pillar of their economic system and agencies of transit. On the other manus Senegal is more diverse and one time as a portion of her history had Gambia as portion of her district, as at that clip it was called Senegambia.

Besides is the issue of, non merely faith but spiritual pattern. Gambia is a state of close equal proportion between Christians and Muslims while Senegal is preponderantly Muslims. As for spiritual pattern in such a state of affairs many yearss are taken off work as public vacations for Christian ; Muslim and national vacations, which in consequence affect their socio-economic development. Religion hence might hold consequence on their fiscal coverage differences ( Hamid et al. , 1993 ) .

Of more chance is the averment that faith can so hold a relationship with civilization with the manner for illustration as they pattern giving and charity which may be injunctions, ordered by the holy books but non harmonizing to best fiscal and accounting pattern.


Culture has been defined in many ways. Few of the well-known anthropological consensus definition run as follows:

Culture consists in patterned ways of thought, feeling and reacting, acquired and transmitted chiefly by symbols, representing the typical accomplishments of human groups, including their incarnations in artefacts ; the indispensable nucleus of civilization consists of traditional ( i.e. historically derived and selected ) thoughts and particularly their affiliated values. ( Kluckhohn,1951, p.86, n.5 ) .

Krober and Parson ( 1958 ) arrived at a cross-disciplinary definition of civilization as “ familial and created content and forms of values, thoughts, and other symbolic-meaningful systems as factors in the defining of human behavior and the artifacts produced through behavior ” ( 583 ) .

Hofstede ( 1984 ) treated civilization as the corporate scheduling of the head that distinguishes the members of one group or class of people from another.

Hofstede used 116,000 questionnaires from over 60,000 respondents in 70 states. He created five dimensions, assigned indexes on each to all states and linked the dimensions with demographic, geographic, economic and political facets of society.

Hofstede five dimensions


Individualism stands for penchant for a slackly knit societal model in society wherein persons are supposed to take attention of themselves and the immediate households merely. Collectivism describes the penchant for a tightly knit societal model in which persons expect their relations, kin or others in a group to look after them in exchange for unquestioning trueness. The cardinal issue addressed by this dimension is the grade of mutuality a society maintains among persons. The difference relates to the people ‘s ego construct of: “ I ” or “ we ”


Masculinity stands for penchant in society for accomplishment, gallantry, and assertiveness and stuff success. Its opposite, muliebrity, stands for the penchant for relationship, modestness, attraction, attention for the weak and quality of life.

Uncertainty turning away

This is the grade to which the members of a society feel uncomfortable with uncertainness and ambiguity. This feeling take them to beliefs promising certainty and to keep establishments protecting conformance. Strong uncertainness turning away societies maintain stiff codifications of belief and behavior and are intolerant of aberrant people and thoughts. Weak uncertainness turning away societies maintain a more than rules and aberrance is more easy tolerated.

Power distance

Power distance is the extent to which the members of a society accept that power in establishments and administration is distributed unevenly. Peoples in larger power distance society accept hierarchal order in which everybody has a topographic point that needs no farther justification. The cardinal issue addressed by this dimension is how society handles inequalities among people when they occur.

Long term orientation

This is a late add-on to the initial four factors. This dimension represents a scope of Confucian-like values and was confusion dynamism.


In decision, Nobes citing Soeters and Schreuder say, civilization may be of more direct aid when analyzing other issues, for illustration, differences in the behavior of hearers Soeters and Schreuder, 1988 ) . Senegal and Gambia are both states that portion some signifier of cultural prejudice that are alone to the Sub-Sahara part of West Africa. Their socio-cultural and socio-political and political constructions before and after colonialism are really much similar even though they were both culturally dominated and influenced by their colonial yesteryear as they adopted patterns from other land. Harmonizing to Hofstede cultural Dimensions chart as other west African states, both Senegal and Gambia both portion 77 points in their ‘power distance index ; 20 points each in ‘individualism ‘ ; 46 points each in ‘masculinity ‘ ; 54 points each in uncertainness turning away, and they both portion the same 16 points each in their long term orientation chart. Therefore, even though Senegal is in category B while Gambia is in category A, it is observed in understanding with Nobes that civilization has so overwhelmed other factors for Senegal and Gambia and that the attitude or the differences in the behavior of the hearers might hold helped fostered on the two states the difference in their fiscal coverage.


Nobes C. ( 1998 ) “ Towards a General Model of the Reasons for International Differences in Financial Reporting ” Abacus, Vol. 34, No 2

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