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More attention to cultural diversity would help accountants restore confidence

07 December 2010

‘The professional behaviour of accountants is influenced by national cultural diversity. This means that it is not possible to simply assume that global rules are applied in the same way everywhere in the world’, states Olof Bik. He will be awarded a PhD in economics and business on 9 December 2010.

‘The natural reaction after every crisis is to draw up more rules. However, my research illustrates that becoming aware of the influence of cultural diversity and other behaviour-determining factors affecting how accountants apply the rules could influence the restoration of trust in accountancy.’ Bik thinks that accountancy firms should concentrate more on the local interpretation of international rules when managing their international networks, their local training programmes and their quality assurance procedures.

Confidential information

The accountancy profession depends on mutual trust, communication, cooperation and at the same time a professional, critical basic attitude towards both the accountant teams themselves and towards the client. Bik: ‘Accountants determine the extent to which financial or other audits reflect reality. Checking this often requires access to confidential information. That results in a professional relationship with mutual trust being very important. However, the way that relationship is defined varies in every culture.’

Culture-blind

More than any other profession, accountancy has been able to summarize its core values and principles of behaviour in a single set of globally implemented standards. This is of course very important, in Bik’s opinion. ‘After all, multinationals and the capital markets expect the same quality from accountants all over the world.’ However, it’s the local audit teams in the many different countries who actually apply the rules. It then becomes clear that the way that accountants apply these standards and arrive at a financial statement is culturally determined, states Olof Bik. ‘The rules are culture-blind. They do not take differences in interpretation into account. You cannot simply assume that these rules are being applied in the same way everywhere in the world. Behaviour, including that of accountants, is strongly influenced by cultural background’, according to Bik. Behaviour that is influenced the most by national cultural diversity concerns the sharing of knowledge and the level of involvement of the accountant bearing final responsibility in the audit team.

Critical questions

A professional critical attitude is crucial when conducting audit activities. It is essential to ask clients challenging questions. Although that’s not always easy in Western cultures, in other cultures, for example in some Asian countries where loss of face must be prevented at all costs, it’s even more tricky. ‘Accountants in these cultures often find it harder to ask critical questions or seek confrontation because they are then implicitly questioning the integrity of the management.’ However, in line with the international audit standards, accountants are obliged to ask such questions.

National cultural diversity

‘Western’ nations are also affected by national cultural diversity. We don’t even need to go far from home to find some examples. ‘In the Netherlands, for example, we like to focus on the intention or the principle of the rules and how they are monitored, but accountants in Germany, our nearest neighbour, prefer to work with detailed procedures and guidelines’, explains Bik. This is particularly obvious in countries which are culturally less able to cope with uncertainty. They tend to use rules as something they can hold on to. ‘That, for example, affects the risk analysis and the preference for detailed as opposed to system-oriented activities.’

Restoring confidence

This is why Bik is not appealing for the international rules to be abandoned. What he would like to see is a dialogue on how the rules should be applied in a local cultural environment. ‘Accountants and their supervisory bodies must become aware that more than one road leads to Rome without the intention of the rules necessarily being violated. Instead of the one size fits all approach, they should recognize that different approaches are possible in different cultures’.

Local interpretation

The next step in restoring confidence in accountancy and improving audit quality is thus not creating more and new rules. ‘The natural reaction after every crisis is to draw up more rules. My thesis illustrates that that’s exactly where the solution does not lie’, according to Bik. He would prefer to see international management, local training programmes and quality assurance systems taking the local interpretation of globally agreed rules into account. ‘And then the same would apply to accountancy as for every internationally operating company – the right behaviour is mainly encouraged by taking cultural diversity and other factors determining behaviour into account.’

Curriculum vitae

Olof P.G. Bik (Hazerswoude, 1974) studied Accountancy at the NIvRA-Nyenrode University. He will be awarded a PhD by the Faculty of Economics and Business of the University of Groningen on 9 December (4.15pm). His supervisors were Prof. J.A. van Manen and Prof. S.J. Magala. His thesis is entitled ‘The Behavior of Assurance Professionals – A Cross-cultural Perspective.’ Bik is in charge of Behavioral & Cultural Governance practices within Business Assurance Services at PwC.

Last modified:31 January 2018 11.53 a.m.
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