Question

Although Gray’s model relates cultural values to the accounting value of conservatism as it is embodied in a country’s financial reporting rules, it can be argued that the model is equally applicable to the manner in which a country’s accountants apply those rules:

Cultural dimensions >> Accounting Values >> Accountant’s application of financial reporting rules

Required:

Discuss the implications this argument has for the comparability of financial statements across countries, even in an environment of substantial international ac- counting convergence. Identify areas in which differences in cultural dimensions across countries could lead to differences in the application of financial reporting rules.

Answer 1