Chapter 2 enrironmental influence on accounting development

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2.3.6 Educational Factors

The educational characteristics of a country have a significant effect on accounting practices. These educational characteristics encompass the degree of literacy, including the ability to use simple mathematics; the percentage of people who have received formal schooling at various levels (elementary school, high school, college); the basic orientation of the educational system (religion, vocational, liberal arts, scientific, professional) and the educational match---the appropriateness of educational system’s output for the country’s economic and societal needs (Arpen and Radebaugh, 1985:15).


The more the educational level of a population improves, the less accounting problems may happen, and the more extensive and sophisticated accounting systems and reports become feasible. Because accounting takes a written and numerical form, it has relatively little use or significance in a society that is predominantly illiterate. Meticulous preparation and widespread circulation of corporate financial reports in such a society obviously would not be a judicious use of corporate time, money, and effort. Internally, the accounting planning and control system would be more difficult to be used effectively because of the limited ability of employees to prepare and understand budgets and reports. At the same time, the need for budgeting and control tends to greater in developing countries that have the highest level of illiteracy. Hence, the accountant can face many problems in designing an accounting system for either external or internal use.


The orientation of the educational system also plays a part in determining accounting practices. Perhaps the most obvious relationship is whether mathematics is taught sufficiently to permit compilation and analysis of numerical data. Furthermore, the extent to which accounting itself is taught in the education system will influence the number of people who have some training in, and understanding of, bookkeeping, budgeting, financial analysis, and auditing. And more specifically related to accounting, does an accounting curriculum exist, and if so, what does it entail? Is there a degree in accounting, and for what type of work does the degree qualify someone? More subtly, the teaching and acceptance of the scientific method (the basic law of causality) influences people’s acceptance of, and adherence to, the process of planning, budgeting, and control.

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