Why do we study comparative accounting? Countries around the world have different aspects such as taxation, legal systems, culture and colonial influence that differ the way accounting is reported. Ultimately the need for fair presentation is the final objective to comparative accounting. Thousands of years ago when accounting was first practiced, each country practiced financial reporting according to the power and strengths in their country, regardless of how accounting was reported in neighboring countries. Nowadays, because the world is becoming more globalized and harmonized, standard-setters feel the need to report their accounting in a uniform way. The International Accounting Standards Board [IASB] was formed as a non-for-profit corporation to incorporate, monitor and assess International Accounting Standards for all countries in the world, producing what we know as International Financial Reporting Standards [IFRS]. IASB provides insight on potential amendments to current accounting standards. Furthermore, this paper will provide a description of the accounting systems in the countries of the United States and France and provide a comparison of the two systems.
“Britain's American colonies broke with the mother country in 1776 and were recognized as the new nation of the United States of America following the Treaty of Paris in 1783. During the 19th and 20th centuries, 37 new states were added to the original 13 as the nation expanded across the North American continent and acquired a number of overseas possessions” (CIA World Fact Book, 2004). The history and background of the United States serves as a basis to the way accounting is reported in the US. The earliest method of accounting in the United States includes the “Dutch style” and the “method of Venice” (Secord, PowerPoint, 2006). In addition, accounting in the US highly influenced by the United Kingdom (UK); thus, their accounting development and systems were originally exported from the UK system. This British influence initially brought professionalism to accounting in the United States. In addition, the founding fathers of US accounting and early accounting societies were of expatriate Britons, in particular, Arthur Young of Ernst & Young and James Marwick of KPMG (Nobes, 2006, p143).
“The United States is a federation of individual states, each of which has its own legislative body with extensive powers to control business activity and levy taxes within its own boundaries” (Nobes, 2006, p144). Due to this, the right to practice as a Public Accountant and the requirements of a PA differs from state to state. Furthermore, it is not a requirement for every state to be a member of the national body the American Institute of Certified Public Accountants (AICPA). By definition, the AICPA is a national association for all Certified Public Accountants (CPA) whose mission is to provide accounting professionals with uniform certification and licensing standards, establishing professional standards, and enforcing current requirements” (Definition of AICPA). Any firm that wishes to be audited by the AICPA must follow Generally Accepted Accounting Principles (GAAP will be discussed later in this paper). The AICPA served as a main standard-setter in the United States for several years. The AICPA’s history dates back to 1887 with the formation of American Association of Public Accountants (AAPA), also known as the American Institute of Accountants, with voluntary committees to help the Institute to maintain high quality standards of the PA profession, promote interest as a CPA, act as a spokesperson for the profession, and providing any necessary services to their members (AICPA, 2006-2007). Although the AICPA gave up its role as the main standard-setter, it still issues detailed guidance called Statements of Position, concentrating from 2003 on industry-specific guidance (Nobes, 2006, p148).
The United States’ “federal securities...
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