ACC408 W1-DF1.edited

Hello classmates & Dr. K, According to Nobes' simplified model of accounting diversity, what are the two most important factors influencing differences in accounting systems across countries? The main factors facing accounting diversity include the legal system, taxation, financing providers, inflation, political and economic ties, culture, and the nature of the financing system (Doupnik et al., 2020). Nobes asserted that the main reason for international differences in financial reporting is that different purposes exist depending on the report. The problems arising from accounting diversity are the preparation of consolidated financial statements, access to foreign capital markets, comparability of financial statements, and lack of high-quality accounting information. In what way does Nobes' simplified model of accounting diversity appear to explain accounting developments occurring in Europe over the past three decades? Nobes divided financial reporting systems into two classes, micro-based, and macro-uniform. The micro-based and macro-uniform categories divide into two sub-classes each. The sub-classes divide into two family categories and multiple species (Doupnik et al., 2020). Nobes' simplified model explains accounting developments in Europe over the past three decades by assuming that Type 1 cultures lead to strong equity-outsider financing systems and Type 2 leads to weak equity-outsider financing systems, consistent with Class B. Class B accounting system will evolve toward utilizing Class A accounting. Class A systems are countries with strong equity- outside shareholder financing and reflect Anglo-Saxon accounting. Class B accounting systems are in countries with a weak equity-outside shareholder financing system consistent with Continental European accounting (Doupnik et al.,2020). This model is consistent with the evolution of financial reporting in the European Union over the last three decades.