Accounting Regulations: FCPA, FCP, Hofstede Cultural Dimensions

*1 The Foreign Corrupt Practices Act versus the International Anti-Bribery and Fair Competition Act of 1998. The Foreign Corrupt Practices Act of 1977 (FCPA) is a United States federal law known primarily for two of its main provisions, one that addresses accounting transparency requirements under the Securities Exchange Act of 1934 and another concerning bribery of foreign officials.

The differences between FCP and the ABFCA are that the ABFCA takes over the FCP when it comes to international bribery whether it comes from a U.S citizen or corporation. The ABFCA also dose a better job of describing what bribery of foreign officials contains. (The act makes it illegal for a citizen or corporation of the United States or a person or corporation acting within the United States to influence, bribe or seek an advantage from a public official of another country).
An example of the FCPA is the Bananagate scandal in which Chiquita Brands had bribed the President of Honduras to lower taxes they were caught shut down and punished by the FCPA. 

**2 Using responses to an attitude survey of IBM employees worldwide, Hofstede identified four cultural dimensions that can be used to describe general similarities and differences in cultures around the world: (1) individualism, (2) power distance, (3) uncertainty avoidance, and (4) masculinityMore recently, a fifth dimension, long-term orientation, was identified. 

Individualism refers to a preference for a loosely knit social fabric rather than a tightly knit social fabric (collectivism). 
Power distance refers to the extent to which hierarchy and unequal power distribution in institutions and organizations are accepted. Uncertainty avoidance refers to the degree to which individuals feel uncomfortable with uncertainty and ambiguity.Masculinity refers to an emphasis on traditional masculine values of performance and achievement rather than feminine values of relationships, caring, and nurturing. Long-term orientation stands for the “fostering of virtues oriented towards future rewards, in particular perseverance and thrift.”

From a review of accounting literature and practice, Gray identified four widely recognized accounting values that can be used to define a country’s accounting subculture: professionalism, uniformity, conservatism, and secrecy. Gray describes these accounting values as follows:

Professionalism versus Statutory Control —a preference for the exercise of individual professional judgment and the maintenance of professional self- regulation as opposed to compliance with prescriptive legal requirements and statutory control.

Uniformity versus Flexibility —a preference for the enforcement of uniform accounting practices between companies and for the consistent use of such practices over time as opposed to flexibility in accordance with the perceived circumstances of individual companies.

Conservatism versus Optimism —a preference for a cautious approach to measurement so as to cope with the uncertainty of future events as opposed to a more optimistic, laissez-faire, risk-taking approach.

Secrecy versus Transparency —a preference for confidentiality and the restriction of disclosure of information about the business only to those who are closely involved with its management and financing as opposed to a more transparent, open, and publicly accountable approach.

 *** The International Accounting Standards Board (IASB) is the independent, accounting standard-setting body of the IFRS Foundation.[1] The IASB was founded on April 1, 2001 as the successor to the International Accounting Standards Committee (IASC). It is responsible for developing International Financial Reporting Standards (the new name for International Accounting Standards issued after 2001), and promoting the use and application of these standards.

International Accounting Standards Committee was founded in June 1973 in London and replaced by the International Accounting Standards Board on April 1, 2001. It was responsible for developing the International Accounting Standards and promoting the use and application of these standards.
The International Accounting Standards are an older set of standards stating how particular types of transactions and other events should be reflected in financial statements. In the past, international accounting standards (IAS) were issued by the Board of the International Accounting Standards Committee (IASC). Since 2001, the new set of standards has been known as the international financial reporting standards (IFRS) and has been issued by the International Accounting Standards Board (IASB).

International Financial Reporting Standards (IFRS) are designed as a common global language for business affairs so that company accounts are understandable and comparable across international boundaries. They are a consequence of growing international shareholding and trade and are particularly important for companies that have dealings in several countries. They are progressively replacing the many different national accounting standards. The rules to be followed by accountants to maintain books of accounts which is comparable, understandable, reliable and relevant as per the users internal or external. IFRS began as an attempt to harmonise accounting across the European Union but the value of harmonisation quickly made the concept attractive around the world. They are sometimes still called by the original name of International Accounting Standards (IAS). IAS were issued between 1973 and 2001 by the Board of the International Accounting Standards Committee (IASC). On April 1, 2001, the new International Accounting Standards Board took over from the IASC the responsibility for setting International Accounting Standards. During its first meeting the new Board adopted existing IAS and Standing Interpretations Committee standards (SICs). The IASB has continued to develop standards calling the new standards International Financial Reporting Standards (IFRS).

The Public Company Accounting Oversight Board (PCAOB) is a private-sector, non-profit corporation created by the Sarbanes–Oxley Act, a 2002 United States federal law, to oversee the auditors of public companies. Its stated purpose is to "protect the interests of investors and further the public interest in the preparation of informative, fair, and independent audit reports". Although a private entity, the PCAOB has many government-like regulatory functions, making it in some ways similar to the private "self-regulatory organizations" (SROs) which regulate stock markets, broker-dealers, etc. in the United States.

 The PCAOB has five members, including a chairman, each of whom is appointed by the U.S. Securities and Exchange Commission (SEC). Precisely two members of the PCAOB must be or have been a Certified Public Accountant. However, if the chairman of the PCAOB is one of those two members, he or she may not have been a practicing certified public accountant for at least five years prior to being appointed to the Board. Each member serves full-time, for staggered five-year terms. The Board's annual budget of approximately $180 million,[3] which must be approved by the SEC each year, is funded by fees paid by U.S. securities issuers. The organization has a staff of over 600, and its headquarters is in Washington, D.C

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