Untapped Potential of the Third World Using Accounting Principles

"80 % of humanity lives on under ten dollars every day" (Shah). While this statistic is vast and immense naturally, it perfectly sums the inability from the third world to sign up with other countries in virtually any international economics. The accounting profession within the third world is virtually non-existent, and exactly what is stopping these third world countries from developing is the possible lack of an international accounting system, effective at traversing barriers of language, differentiated standards and resources, education, and government. Ultimately and even more importantly, there should be more emphasis on the importance in why the accounting system is so vital to development.

"Accounting will be the facilitating service for business. Individuals the accounting profession have always been reactive in meeting business' changing needs for information" (Garner and McKee). Accounting plays some important roles in economic development, particularly as being a key player in information analysis. Accounting encompasses such a wide array of financial aspects. Inside a thriving economy accounting is accountable for reporting financial data, costing labor and materials, and ethically running a business or company. The main participants are management, government, and stakeholders. Without these three things, when it comes to accounting information, no economy would thrive not to mention a third world country.

Realizing the issue is bringing accounting for the third world, there are several obstacles in how preventing any kind of rapid growth via accounting. First and foremost, accounting, for the most part, is lost in translation of other languages other than English. It may possibly seem somewhat simple, seeing as numbers are universal, however there is a lot more to accounting than only numbers. While international methods are getting to be more mainstream (IFRS), there may be still that barrier of arriving at each of the third world languages that is preventing any kind of progress.

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Another hurdle to obtain passed from the third world is definitely the scarcity of information, especially those of statistical analysis. In america as well as the Uk, information regarding accounting standards, whether they are GAAP, IFRS, etc... is everywhere. Whereas information about standards within a third world country changes from location to place (and so are probably obsolete when it reaches your third world), and depending on how advanced the country is, accounting information may well not even be able to be kept.

Third and somewhat controversial may be the accounting education inside the third world. No matter where in the world accountants are derived from inside the third world, as there are hardly any standards in a few countries it really is virtually impossible to produce some type of educational/certification program. There may be "no use producing more and much better qualified accountants if the information they offer is not understood or necessary for the person" (Briston, Samuels, and Wallace). This, together with the insufficient funding that accounting education receives inside the third world, creates an environment alone where accounting cannot and may not thrive.

Finally, the final hindrance to accounting in the third world is always that the requirements the 3rd world are different and diverse from that relating to the western world, because more western world use a more conservative procedure for accounting than is necessary for rapid development (Rahaman). This assumes that each country has got the same kind of government; letting western society's strategies for accounting go unchallenged. Western civilization was founded primarily on capitalism, and our financial accounting systems reflect that.

Ultimately, for change and development inside the third world there are lots of things which should happen before an accounting profession exists. While the world is increasingly doing more research about the matter, a major international accounting standard has yet to become adopted by the vast majority of accounting users of the world. "Since the international economy develops, this assortment of standards creates problems for multinational corporations and multinational holding companies" (Garner and McKee). This is actually the 1st step in providing developing countries using the tools needed for growth. While progression of international standards is slow and intensely faraway from being perfect, your third world is within desire for some sort of standard which is not out dated. Globalization is calling on an accounting system which every country could possibly get behind such as the third world.