ACCOUNTING PRACTICES IN MALAYSIA AND UK

Accounting Practices in Malaysia and UK



Accounting Practices in Malaysia and UK



Introduction

A difference in the accounting systems around different boundaries of the country is a phenomenon that has attracted attention of various scholars and invited researchers to focus of this area. Such a concept is commonly referred as accounting diversity. Numerous articles and studies worldwide have listed the main causes of accounting diversity according to the following categories:

Legal and cultural system

Sovereignty in Imposing Taxes

Sources of Funding

Inflationary Impact

Political and Economic Ties

Globally the main issues that arise in accounting treatment differences have to do with the rules for the recognition and measurement of assets and liabilities. The main cause of diversity relates with the use of fair value within the many accounting rules. Another striking theme with respect to the accounting diversity is the treatment for tax calculation.

Scope of the Paper

The scope of the paper is to discuss about the issue of the diversity of systems and accounting practices in Malaysia and UK. This is, firstly, to expose a literature review on the determinants of the diversity of systems and accounting practices through a comprehensive analysis of socio-cultural, political, economic and institutional factors.

Discussion

The study of the difference between the accounting systems of different economies has been the focus of several authors in international accounting since the 60s saw the importance of this field of research. Several studies have focused on searching for the key variables factors of evolution and change of accounting systems or other sources of the diversity of such systems in time and space. The diversity of accounting systems of an economy to another is explained by a set of key factors that determine the specificity of the institutional framework of such an economy through its three interrelated components namely market repository in sociological and legal context (Nobes, 1998). Research reveals that there is an important issue in international accounting harmonization on the problem and the diversity of accounting information between countries, which is why the information accounting is not even seen having influence of the environment. Other authors have shown that the diversity of systems and accounting practices is mainly due either to culture and social context or environment policy and regulatory ignoring any economic environment. It is also observed out clear that the component culture is crucial in this diversity of accounting systems and practices. Therefore, cultural borrowing is a factor that has enabled the Malaysian accounting system to fertilize another accounting system that is dynamic and evolving. The Hofstede dimensions for Malaysia and United Kingdom are given below (The Hofstede Center¸2012):

Source: The Hofstede Center



Malaysia

Social and Cultural Factors

There is no law on the minimum wage and salary amounts; it may vary by city and level of qualification. Labor costs are low, but are not the most competitive in the South-East. It takes about 200 Euros for a worker, approximately 2500 Euros for a senior manager and 4000 Euros for a ...