Accounting System in UK

Running Head: Accounting System in UK
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Development Factors
The main source of financing to companies, especially the pre-dominant limited liability Companies, in most parts of the UK is the Capital market. Accounting plays a major role in the provision of vital information to the Capital market. It focuses entirely on principle-based approach in standard setting other than the normal rule-based approach. Initially it emerged as an independent body following the ever changing business needs. Later, a professional accounting body was established in 1853 and now there are six such bodies under the Consultative Committee of Accountancy Bodies (CCAB)
Development FactorRussiaThe United KingdomSources of FinanceCommercial banks and governmentCapital and share marketLegal EnvironmentAccounting for taxationThe accounting for taxation is not separate from financial accounting. As such, the financial reports and statements that reveal the financial position are the ones used in taxation. Thus no difference between taxable profit and accounting profits.Financial accounting differs from accounting for taxes. As such taxable profits differ from accounting profits.Economic and political TiesInflationEconomic Development levelLevel of educationCultural environment
The development factors analyzed above provide an inherent accounting values when they co-ordinate together. This is inclusion of the cultural characteristics deployed by the existing country.
 Institutional consequences
 External influences



Ecological influences




Reinforcement
Therefore, Hofstede views that cultural and societal values merges from the diversified nature of historical, political and economic values which are endowed in a particular country, For example, the Hofstede’s socio-cultural behavior in the Russia and UK.
The 5D Model of Professor Geert Hofstede
 EMBED Excel.Chart.8 \s 

The diagram illustrates how the variuos societal/cultural values can build up over a given time-frame via the inter-related process. The emergence of such values determinbes the economy and political destiny of the country and also the laws and regulations to be deployed. The interconnection between accounting and societal values and the systems in place is hoighlighted as in the diagram below:
Societal Values Accounting values Accounting systems




From the above diagram, the accounting systems and practices reinforce the accounting values. Accounting values on the other hand reinforces societal values.
The original contestation of the Hofstede and Gray models faced severe pressure on the global perspective of the worlds’ economy. The process of harmonization has been argued by various authors to have reduced the models’ value. They argue that the p...