BUS707 Impact of Organization Culture on Accounting Systems - Research Proposal Assignment Solution

Introduction to the Research

Culture eats strategy for breakfast. This is a famous saying by Organization Development practitioners. The saying merely means that no matter how excellent and well thought systems and strategies are made, the implementation and sustainability of these strategies are based on the culture of the organization.  

Approximately, the world population is over 7.5 billion people divided between 196 countries; speaking approximately 6,500 different languages. This could easily equate to about 6,500 different cultures itself or a minimum of 196 different cultures globally. Cultures are made from belief sets, practices, customs and values of a country or community. When individuals from different cultures come together under one roof of the organization and must perform their best, the situation becomes more complex. This is where the organization’s culture steps in and sets a tone for the working environment. Just like countries vary in cultures, organizations vary in culture as well.

Culture in itself is a very broad theme and has several meanings, far greater than what are commonly believed, studied and researched within our societies. If referring to culture within business context only, Hofstede provides a very notable definition of what culture means by stating “the collective programming of the mind which distinguishes the members of one group or society from those of another”(Hofsted, 1984). In other words, each group has certain factors attached to them that distinguishes them from the rest – these factors can be in form of a code of conduct, through process, practices and procedures, norms, values, and interaction with the world. The author further asserts that though culture may stems from internal thoughts and personal actions, but they gradually convert into external when a person carries out his or her actions based on their internalized values. 

The culture of an organization has a major impact on the systems and ways of working within the organization. It plays a vital role on how different functions operate and practice (Akuntansi., 2013). In the current era of growing and innovation within the IT sector, practices in organizations are changing. Methods used in manufacturing today are focused on being more efficient than they were years ago. The current trend in organizations is to focus on a culture that promotes innovation, entrepreneurial mindset, working with the open talent economy etc. When organizations are changing the way they work altogether in order to keep up with the changes that occur in the external environment, the most challenging changes are faced by the accounting and auditing department of the organization. The underlying reason behind such challenges are pinned under the fact that for every new initiative that is taken or any new system that is implemented, a new method of accounting system will need to be set in place for support. 

Accounting practices that are followed to draw up financial statements or highlighting and exposing misstatements are almost similar to what other organizations undertake in different part of the world that is because of the identical accounting standards that are being followed every year. Apart from obvious differences that arise as a result of following either of the two accounting standards that are International Financial Reporting Standard (IFRS) and Generally Accepted Accounting Principles (GAAP), there are no substantial variances in accounting practices that companies have adopted(Young, 2013). Nevertheless, the greatest impact that any accounting practice can burden comes from organizational cultures. As business relationships differ from company to company, the impact of culture on these practices are deem to be different.