The Development o f accounting Systems and Accounting Education in High Income Oil Exporting Countries: An Overview
The Development o f accounting Systems and Accounting
Education in High Income Oil Exporting Countries: An Overview
Scnarath Yapa
D e p a r t m e n t o f M a n a g e m e n t St u d i e s U n i v e r s i t y o f Br u n e i D a r u s s a l a m Br u n e i D a r u s s a l a m
Hema YVijewardena
D e p a r t m e n t o f A c c o u n t i n g an d Fi n a n c e University of Wollongong Australia
Abstract
Fo r a co n si d er ab l e len g t h o f t im e, t he d evel o p m en t o f acco u n t i n g in T h i r d Wo r l d co u n t r i es ( T W C s ) has b een i d en t i f i ed b y m an y w r i t er s on t he b asis
o f v i e w i n g t h ese co u n t r i es as a si n g l e eco n o m i c g r o u p . A s a r esu lt o f t he r ap i d eco n o m i c ch an g es t ak en p l ace af t er t he o i l b o o m t he d evel o p m en t o f
acco u n t i n g syst em s an d acco u n t i n g ed u cat i o n in h ig h in co m e o i l ex p o r t i n g co u n t r i es ( H I O EC s ) has b een s i g n i f i ca n t l y d i f f er en t f r o m t hat o f o t h er T W C s . T h er ef o r e, t he u n i f i ed v i ew o f T h i r d W'o r l d acco u n t i n g is n o lo n g er ap p r o p r i at e an d t he eco n o m i c d i f f er en t i at i o n n eed s to be t ak en in t o acco u n t
in an y r eal i st i c cl assi f i cat i o n o f acco u n t i n g in t h is p art o f t he w o r d . Fu r t h er , t h e 'sp h er e o f In f l u en ce ' m et h o d o l o g y u sed b y Fn t h o v en (1 9 7 7 ) f o r
c l a s si f y i n g acco u n t i n g syst em s in t he T h i r d Wo r l d is not ap p l i cab l e to
I I I O F C s b ecau se, u n l i k e in o t h er T W'Cs . t he d evel o p m en t o f acco u n t i n g an d acco u n t i n g ed u cat i o n in t h is p ar t i cu l ar g r o u p o f co u n t r i es is not an o u t co m e o f su ch h i st o r i cal f act o r as c o l o n i al ex p er i en ce an d o r c o l o n i al affinity.
1. Introduction
M a n y w r i t e r s f o r a l o n g t i m e h a v e r e c o g n i z e d T h i r d W 'o r l d c o u n t r i e s ( T W C s ) as a s i n g l e u n i t a r y g r o u p w h e n d e a l i n g w i t h a c c o u n t i n g s y s t e m s an d
a c c o u n t i n g e d u c a t i o n in d i f f e r e n t p ar t o f t h e w o r l d . N e v e r t h e l e s s , b y t h e e i g h t i e s it
b e c a m e a p p a r e n t t h at t h e T h i r d W o r l d w a s n o l o n g e r a s i n g l e e c o n o m i c u n i t b e c a u s e of the vast
d i s p a r i t i e s in e c o n o m i c p e r f o r m a n c e s o f t h e se c o u n t r i e s . H o w e v e r , n o s e r i o u s a t t e m p t h as b een m a d e in t h e a c c o u n t i n g l i t e r a t u r e t o i n v e s t i g a t e w h e t h e r o r n o t t h e d e v e l o p m e n t o f a c c o u n t i n g s y s t e m s an d a c c o u n t i n g e d u c a t i o n o f T W C s
c o u l d b e e x p l a i n e d in a c c o r d a n c e w i t h t h e i r e c o n o m i c d i s p a r i t i e s . A h a l f h ea r t e d
V o l . 4 . N o . I. M a r c h l ‘M G C e n t r e f o r In d o n e s i a n A c c o u n t i n g an d M a n a g e m e n t Re s e a r c h
I h e 1 )c \ e l o p m e n t o f A c c o u n t i n g S\ st em s an d A c c o u n t i n g I 'd u c a t i o n ... 41
a t t e m p t t o b r e a k t h i s t r a d i t i o n a l w a s m a d e b y Sh o e n t h a l , K a n t o r an d N e e d l e s ( 1 9 () | ) w h e n f o u r t e e n c o u n t r i e s o f t h e A s i a n - Pa c i f i c r e g i o n w e r e g r o u p e d a c c o r d i n g t o t h e different levels of their economic performances with a view to vending out professional
a c c o u n t i n g e d u c a t i o n an d t r a i n i n g s t a n d a r d s o f t h o se c o u n t r i e s .
A l t h o u g h i n f o r m a t i o n r e l a t i n g t o p r o f e s s i o n a l t r a i n i n g a n d s t a n d a r d s w e r e p r es e n t ed
a c c o r d i n g t o t h e e c o n o m i c g r o u p i n g o f t h e se c o u n t r i e s , l i t t l e a t t e m p t w a s m a d e t o relate or analyze the influence of economic factors on professional accounting
A c c o u n t a n t s ( C A P A ) . So u t h A s i a n Fe d e r a t i o n o f A c c o u n t a n t s ( S A F A ) , an d A r a b So c i e t y o f C e r t i f i e d A c c o u n t a n t s ( A S C A ) e m p h a s i z e t h e e c o n o m i c an d s o c i a l similarities among their member countries they have also not made any serious
a c c o u n t i n g s y s t e m s an d w h e t h e r su c h s i m i l a r i t i e s in t h e i r a c c o u n t i n g s y s t e m s an d w h e t h e r s u c h s i m i l a r i t i e s a r e a r es u l t o f t h e i r e c o n o m i c p e r f o r m a n c e s . I f su c h a s i t u a t i o n e x i s t s , t h en it m i g h t s t r e n g t h e n t h e p e r c e i v e d a s s u m p t i o n o f ' a c l o s e r e l a t i o n s h i p b e t w e e n e c o n o m i c f a c t o r s an d a c c o u n t i n g . O u r p a p e r is an a t t e m p t in this direction.
a c h i e v e m e n t s . T h e r e m a i n d e r o f t h e p ap er s o r g a n i z e d as f o l l o w s : T o p r o v i d e a perspective for the subsequent discussion.
II. The Need For Recognizing Different Groups Within The Third
World
T h e r e h as b ee n a c o n s i d e r a b l e a m o u n t o f a c a d e m i c d i s c u s s i o n , p a r t i c u l a r ! ) in t h e p ast t w o d e c a d e s , o n t h e i m p o r t a n c e o f d e v e l o p i n g e f f e c t i v e a c c o u n t i n g
V o l . 4 . N o . I. M a r c h 1 9 % © C e n t r e l o r In d o n e s i a n A c c o u n t i n g an d M a n a g e m e n t Re s e a r c h V o l . 4 . N o . I. M a r c h 1 9 % © C e n t r e l o r In d o n e s i a n A c c o u n t i n g an d M a n a g e m e n t Re s e a r c h
e x p e r i e n c e an d / o r c o l o n i a l a f f i n i t y . T h e v a l i d i t y o f t h i s d e p e n d e n c y t h e o r y , h o w e v e r , depends partly on whether the lines of division between the five classes of
h y p o t h e s i s s e e m s t o s u f f e r f r o m m e t h o d o l o g i c a l p r o b l e m s as p o i n t e d o u t b y Wallace:
The inadequacies of the ‘spheres of influence' methodology for classifying accounting systems of the world include (i) the difficulty o f c l a s s i f y i n g , w h i c h h as e x p e r i e n c e d s i g n i f i c a n t f o r e i g n i n f l u e n c e
f r o m m o r e t h a n o n e c o u n t r y , i n t o a s p h e r e an d ( i i ) t h e i n a b i l i t y o f the methodology to capture all countries of the word since many of t h e m c a n n o t b e s a i d t o h a v e b een o n c e c o l o n i z e d . I f c o l o n i a l experience cannot provide a basis for classifying the accounting s y s t e m s o f t h e w o r l d s c h o l a r s m u s t t u r n t o o t h e r m o d e l s (1 9 9 0 , 3 6 ).
In s e v e r a l o t h e r s t u d i e s , t h e w r i t e r s e m p h a s i z e d t h e i m p o r t a n c e o f e c o n o m i c
f a c t o r s in t h e d e v e l o p m e n t o f a c c o u n t i n g s y s t e m s an d e d u c a t i o n in T W C s ( M u e l l e r ,
1 9 6 8 ; Sc o t t , 1 9 7 0 ; En t h o v e n , 1 9 8 1 b ; Sa m u e l s an d O l i g a , 1 9 8 2 ; ). En t h o v e n (1 9 8 1 a ) in his study on accounting education systems of TWCs identified a number of
b y C a r m o n y (1 9 8 7 ) i d e n t i f i e d m a j o r e n v i r o n m e n t a l f a c t o r s i n f l u e n c i n g t h e e n t e r p r i s e accounting system in TWCs with special reference to Uruguay.
V o l . 4 . N o . 1. M a r c h 1 9 9 6 © C e n t r e f o r In d o n e s i a n A c c o u n t i n g an d M a n a g e m e n t Re s e a r c h
Ex p o r t i n g C o u n t r i e s . Organization
C o u n t r i e s ( N I C s ) o r N e w l y In d u s t r i a l i z e d Ec o n o m i e s ( N I E s ) . T h e y a l l s h a r e t h e common characteristics of a high level of manufacturing exports, a rising share of
i n d u s t r i a l e m p l o y m e n t an d a r a p i d i n c r e a s e in t h e r e a l G r o s s D o m e s t i c Pr o d u c t (GNP) per capita relative to the more advanced industrial countries.
B y t h e e i g h t i e s it w a s w e l l a c c e p t e d t h at t h e T h i r d W o r l d w a s n o l o n g e r a s i n g l e e c o n o m i c u n i t an d at l east f o u r g r o u p s w e r e d i s t i n g u i s h a b l e - O PEC m e m b e r
c o u n t r i e s . N e w l y In d u s t r i a l i z e d C o u n t r i e s ( N I C s ) . T h e s e a r e e v i d e n t f r o m t h e l i t e r a t u r e d e a l i n g w i t h T W C S (K u r i a n , 1 9 8 2 ; H o o g v e l t , 1 9 8 2 ; W o r l d Ba n k , 1 9 8 9 ).
A s s u c h , t h e r e is c e r t a i n l y a n eed f o r r e c o g n i z i n g d i f f e r e n t g r o u p s a m o n g t h e T W C s from the point of view of their economic differentiation.
Economic Characteristics o f HIOECS and Their Impact on Accounting
Oil exporting countries attracted the interests of the Third World after the oil p r i c e h i k e in 1 9 7 3 an d w e r e p l a c e d as a s ep a r a t e g r o u p in t h e w o r l d e c o n o m y t o denote their enviable economic solvency compared to the fellow TWCs. The m e m b e r s h i p o f O P E C is w i d e l y u sed as a b as i s f o r i n c l u s i o n in t h i s g r o u p . H o w e v e r ,
c l a s s i f y i n g O P E C i n t o o n e g r o u p g a v e r i s e t o p r o b l e m s as t h i s g r o u p c o m p r i s e s
d i s s i m i l a r e c o n o m i e s w i t h K u w a i t h a v i n g o n e o f t h e h i g h e s t p e r c a p i t a i n c o m e s an d
V o l . 4 . N o . 1. M a r c h 1 9 9 6 © C e n t r e t o r In d o n e s i a n A c c o u n t i n g an d M a n a g e m e n t Re s e a r c h
A l t h o u g h t h e H I O E C s ar e s o c i a l l y an d c u l t u r a l l y s i m i l a r , t o a g r ea t e x t en t , t o o t h e r T W C s . t h e i r e c o n o m i c c h a r a c t e r i s t i c s s u c h as h i g h p er c a p i t a i n c o m e , l o w density of population,
heavy dependence on
expatriate
l a b o u r an d superior
i n f r a s t r u c t u r e s ep a r a t e t h e m f r o m t h e r est o f t h e T h i r d W o r l d . A t t h e s a m e t i m e , t h e lack of a strong industrial
b ase an d t e c h n o l o g i c a l
know-how an d t h e h i g h
d e p e n d e n c e o n o n e s e c t o r (i . e . m i n i n g ) e x c l u d e t h em f r o m t h e i n d u s t r i a l i z e d w e st .
Table 1 Area, Population and GNP o f High Income Oil Exporting Countries-1987
Co u n t r y
Area Sq uq rc KIM
Populat ion
GN P per capit a ( CSS)
i n d u s t r i a l b ase, a d i v e r s i f i e d e c o n o m y an d a h i g h l e v e l o f t e c h n i c a l k n o w - h o w in
c o m p a r i s o n t o H I O E C s . T h e m a j o r e c o n o m i c d i f f e r e n c e s b e t w e e n t h e se t w o g r o u p s o f c o u n t r i e s in r e l a t i o n t o m o s t o f t h e T W C s a r e h i g h l i g h t e d in f a b l e 2:
V o l . 4 . N o I. M a r c h 1 9 % © C e n t r e f o r In d o n e s i a n A c c o u n t i n g an d M a n a g e m e n t Re s e a r c h
I h e I )c \ e l o p m e n t o f A c c o u n t i n g S\ st em s an d A c c o u n t i n g K d u c a t i o n 45
Up to be beginning of the seventies, the economies of HIOFX's were
c h a r a c t e r i z e d b\ l o w p er c a p i t a i n c o m e , l o w a n n u a l sav i n g s an d l o w g r o w t h r at e. T h e h e a v y i n c r e a s e s o f o i l p r i c e s an d t h e h i g h d e m a n d f o r o i l in t h e i n t e r n a t i o n a l m a r k e t f r o m 1 9 7 3 r a p i d l y c h a n g e d t h e e c o n o m i c p e r f o r m a n c e o f t h e se c o u n t r i e s . Be i n g t h e m a i n e x p o r t e r s o f o i l t h ese c o u n t r i e s a c c u m u l a t e d h u g e l i q u i d asset s. T h i s
d e v e l o p m e n t an d an a m b i t i o u s s t a t e - i n i t i a t e d w e l f a r e s v st e m f o r t h e i r c i t i z e n s . T h e existing technological,
inflastructures were found to
i n a d e q u a t e t o c o p e w i t h su c h a r a p i d e c o n o m i c d e v e l o p m e n t . A s a r e s u l t , r a p i d importation of advanced
personnel was followed to overcome the problem
f o r e i g n t e c h n o l o g y an d
Table 2
Major Economic Differences Among High Income Oil Exporting Countries
(Hioecs), Newly Industrialized Countries (Nics) and Most o f The Third World
C ountries (Tvvcs)
H IO FX's
NICs
Most of the T WCs
Fo w p er c a p i t a i n c o m e income
Sl o w Fc o n o m i c development
Mainly densely p o p u l at e d
a g r i c u l t u r a l p r o d u ct s gas)
m a n u f a ct u r e d g o o d s
V o l . 4 . N o . I. M a r c h 1 9 9 6 © C e n t r e l o r In d o n e s i a n A c c o u n t i n g an d M a n a g e m e n t Re s e a r c h
46 T h e In t e r n a t i o n a l Jo u r n a l o f A c c o u n t i n g an d Bu s i n e s s So c i et N
Speedy development o f accounting systems
s a m e p e r i o d ( A b d e e n an d Y a v a s , 1 9 8 5 ). Th e e m e r g e n c e o f l a r g e c o m p a n i e s w i t h separation of management from ownership necessitated the application of modern
e v e n b e f o r e t h e o i l p r i c e h i k e . In c o n t r a s t , t h e H I O E C s w h i c h h ad an a l m o s t p r i m i t i v e a c c o u n t i n g s y s t e m h ad t o c h a n g e o v e r t o a m o s t m o d e r n a c c o u n t i n g s y s t e m o v e r a v e r y sh o r t p e r i o d o f t i m e . T h i s w a s d i f f e r e n t f r o m t h e e x p e r i e n c e s o f o t h e r TWCs where accounting development was taking place gradually. The large
financial resources of HIOECs helped them to modernize their accounting systems q u i c k l y . T h e y c o u l d a f f o r d e x p e n s i v e m o d e r n c o m p u t e r , f o r e i g n e x p e r t s an d o t h e r
e s s e n t i a l i n g r e d i e n t s n ee d ed f o r t h i s q u i c k t r a n s f o r m a t i o n . Bu t m o s t o f t h e o t h e r T W C s c o u l d n o t a f f o r d su c h f a c i l i t i e s d u e t o r e s o u r c e c o n s t r a i n t s . Fo r e x a m p l e , Ju c h a u et . a l . ( 19 8 6 ) f o u n d t h at So u t h e a s t Pa c i f i c c o u n t r i e s s u c h as F i j i , T o n g a an d
So l o m o n Is l a n d s h a v e a g r ea t s c a r c i t y o f r e s o u r c e s t o d e v e l o p t h e i r a c c o u n t i n g s y s t e m s (Ju c h a u e t . a l . . 1 9 8 6 ). G h a r t e y (1 9 8 5 ) r ep o r t e d t h at p o v e r t y in t h e A f r i c a n s o c i e t y is o n e o f t h e m a j o r o b s t a c l e s t o d e v e l o p i n g e f f e c t i v e a c c o u n t i n g s y s t e m s in t h o s e c o u n t r i e s . T h i s is a l s o t r u e f o r m a n y o t h e r T W C s .
Impact o f multinational enterprises and international accounting firms
In HIOECs
accounting systems by
i m p o r t a t i o n o f e q u i p m e n t , o r g a n i z a t i o n s an d p e r s o n n e l e x p o s e d t h e m t o a v a r i e t y o f
e x t e r n a l i n f l u e n c e s . A s t h e se c o u n t r i e s d i d n o t e i t h e r h a v e an e s t a b l i s h e d a c c o u n t i n g s y s t e m o r a s u b s t a n t i a l r e g u l a t o r y f r a m e w o r k in t h e l e g a l s y s t e m f o r a c c o u n t i n g
V o l . 4 . N o . 1. M a r c h 1 9 9 6 © C e n t r e f o r In d o n e s i a n A c c o u n t i n g an d M a n a g e m e n t Re s e a r c h
T h e D e v e l o p m e n t o f A c c o u n t i n g Sy s t e m s a n d A c c o u n t i n g Ed u c a t i o n 47
p r a c t i c e s t h e i m p o r t e d s y s t e m s h ad l i t t l e d i f f i c u l t y in p e n e t r a t i n g (Po m e r a n z a n d
H a q q i , 1 9 8 5 ; G r e s s , 1 9 8 5 ; H a s a n , 1 9 8 5 ). A c c o r d i n g l y , t h e m a i n a g e n t s o f i n f l u e n c e o n a c c o u n t i n g s y s t e m s an d e d u c a t i o n in t h e se c o u n t r i e s h a v e b een m u l t i n a t i o n a l enterprises, international accounting firms and expatriate accountants.
O i l c o m p a n i e s o f U S A . U K , Fr a n c e a n d t h e N e t h e r l a n d s w e r e d i r e c t l y involved in the exploration of oil in most of the HIOECs. For example, from the v e r y b e g i n n i n g A r a b i a n A m e r i c a n O i l C o m p a n y ( A R A M C O ) o f Sa u d i A r a b i a , K u w a i t O i l C o m p a n y ( K O C ) o f k u w a i t a n d Br u n e i Sh e l l Pe t r o l e u m ( B S P ) o f Br u n e i
h a v e o p e r a t e d as g i a n t c o r p o r a t i o n s j o i n t l y o w n e d by various multinational enterprises and governments of foreign countries. These companies which are enormously large
in t e r m s o f c a p i t a l e m p l o y e d , n u m b e r o f e m p l o y e e s a n d operational activities virtually control the entire oil industry in the respective countries. These are also the pioneering organizations which introduced modern
a c c o u n t i n g s y s t e m s i n t h e s e c o u n t r i e s . T h e i r a c t i v i t i e s h a v e n o t b ee n c o n f i n e d t o t h e introduction of modern accounting systems, but also include undertaking extensive t r a i n i n g p r o g r a m s f o r l o c a l a c c o u n t a n t s . In g e n e r a l , t h e y h a v e a c t i v e l y e n g a g e d t h e m s e l v e s in p r o m o t i n g a c c o u n t i n g e d u c a t i o n i n t h e s e c o u n t r i e s . Fo r e x a m p l e , in
Br u n e i , Br u n e i Sh e l l Pe t r o l e u m C o m p a n y p r o v i d e s s c h o l a r s h i p s , g r a n t s a n d o t h e r teaching aids to educational institutions to promote technical education which among other subjects includes accounting (BSGC,
1 9 9 0 ). A s a n o t h e r r e c e n t
d e v e l o p m e n t , Br u n e i Sh e l l Pe t r o l e u m h as o r g a n i z e d f o r it s e m p l o y e e s an i n - h o u s e course leading to the professional qualification of the Association of Accounting T e c h n i c i a n s ( A A T ) . In Sa u d i A r a b i a , K i n g Fa h d U n i v e r s i t y o f Pi • '• oleum an d M i n e r a l s o f f e r c o u r s e s , g r a n t s an d c o n s u l t i n g a s s i s t a n c e t o u p g r a d e t h e s k i l l s in t e c h n i c a l a n d p e t r o l e u m r e l a t e d a r e a s i n c l u d i n g o i l an d g a s a c c o u n t i n g .
In a d d i t i o n t o m u l t i n a t i o n a l o i l c o m p a n i e s , t h e o t h e r f o r e i g n c o m p a n i e s w h i c h h a v e b ee n u n d e r t a k i n g m a j o r d e v e l o p m e n t w o r k s s u c h as c o n s t r u c t i o n , communication and manufacturing exert considerable influence on the accounting s y s t e m s o f t h e s e c o u n t r i e s . Fo r e x a m p l e , Ei k h a r o u f (1 9 8 5 ) r e p o r t e d t h a i 'h e r e h as a significant amount of influence of such foreign companies on the development of
a c c o u n t i n g s y s t e m i n Sa u d i A r a b i a . H a s a n (1 9 8 5 ) a l s o f o u n d it t r u e f o r t h e G u l f state1
Along with multinational enterprises large international accounting firms
a l s o i n f l u e n c e t h e a c c o u n t i n g s y s t e m s in H I O E C s A s a m a t t e r o f f a c t , i n t e r n a t i o n a l
p r a c t i c e s in t h e se countries.
cs an d international
he sc cou:.u
oca' accounting
firms
is another
r e a ‘-.> • ;\ >r
, :'h \ s icfernn.’
(G r e s s , 1 9 8 5 ). In Br u n e i , w h e r e i n t e r n a t i o n a l a c c o u n t i n g f i r m s d o m i n a t e m a i n l y in the area of public accounting, training programs are conducted by some of them for their clients to acquaint them whit the modern accounting techniques which among o t h e r t h i n g s i n c l u d e t h e u se o f c o m p u t e r s in a c c o u n t i n g . T h e f o r m a t i o n o f t h e Br u n e i
a s s o c i a t i o n o f C e r t i f i e d Pu b l i c A c c o u n t a n t s ( B A C P A ) in 1 9 8 7 w a s a l s o m a i n l y
i n i t i a t e d b y t h e i n t e r n a t i o n a l a c c o u n t i n g f i r m s . A l t h o u g h N e e d l e s (1 9 8 8 ) f o u n d similar influence of international accounting firms on the auditing standards of some
F a r Ea s t C o u n t r i e s l i k e In d o n e s i a , M a l a y s i a , Ph i l i p p i n e s , Si n g a p o r e a n d T h a i l a n d , It is d o u b t f u l w h e t h e r s u ch i n f l u e n c e in f a r Ea s t c o u n t r i e s is as g r e a t as t h a t in HIOECs.
In o t h e r T W C s , t h i s d o m i n a t i o n o f m u l t i n a t i o n a l a n d o t h e r f o r e i g n f i r m s in t h e e c o n o m y a n d c o n s e q u e n t l y in t h e a c c o u n t i n g s y s t e m i n a b s en t . Ev e n t in o t h e r o i l
e x p o r t i n g c o u n t r i e s l i k e M a l a y s i a . V e n e z u e l a . Ir a n a n d Ir a q , the presence of m u l t i n a t i o n a l f i r m s is n o t as v i v i d as in H I O E C s b e c a u s e t h o s e c o u n t r i e s h ad a r e a s o n a b l e i n d u s t r i a l b as e a n d t e c h n i c a l k n o w - h o w e v e n b e f o r e t h e o i l b o o m . M o r e o v e r , as Si n c l a i r (1 9 8 2 ) p o i n t e d o u t H I O E C s g e n e r a t e d m o r e s u r p l u s f r o m o i l r e v e n u e s t h a n o t h e r o i l e x p o r t i n g c o u n t r i e s w i t h w h i c h t h e y c o u l d a f f o r d t o s p en d o n various economic activities. As a result, the drastic economic changes introduced w i t h t h e h e l p o f m u l t i n a t i o n a l c o m p a n i e s a f t e r t h e o i l b o o m w e r e g r e a t e r in H I O E C s compared to other oil exporting countries.
Impact o f expatriate accountants
A s m e n t i o n e d e a r l i e r , H I O E C s a r e s p a r s e l y p o p u l a t e d . Pr i o r t o t h e o i l b o o m , t h e p o p u l a t i o n in a l l t h e s e c o u n t r i e s c o n s i s t e d s o l e l y o f a s m a l l i n d i g e n o u s community. Accordingly, they lacked human capital both in terms of quality and quantity. Therefore, the rapid economic programs introduced after the sudden advent of wealth from oil necessitated the importation of vast numbers of foreigners.
V o l . 4 , N o . 1. M a r c h 1 9 9 6 © C e n t r e f o r In d o n e s i a n A c c o u n t i n g an d M a n a g e m e n t Re s e a r c h
c o u n t r i e s l i k e Ir a n , Ir a q , M a l a y s i a , an d N i g e r i a a l s o d o n o t s u f f e r f r o m t h e s h o r t a g e of local accountants.
Developm ent o f higher education in accounting
H I O E C s , w h e r e h i g h e r e d u c a t i o n in g e n e r a l a n d a c c o u n t i n g e d u c a t i o n i n p a r t i c u l a r are relatively resent phenomena, have a different sort of influence on their
a c c o u n t i n g e d u c a t i o n w h i c h c a n n o t b e c a l l e d ' c o l o n i a l ' , In a i l t h e se c o u n t r i e s t h e n ee d f o r h i g h e r e d u c a t i o n i n a c c o u n t i n g w a s s e r i o u s l y f e l t o n l y a f t e r t h e o i l b o o m in t h e e a r l y s e v e n t i e s . T o m e e t t h i s n ee d , m o s t o f t h e H I O E C s s t a r t e d e s t a b l i s h i n g
h i g h e r e d u c a t i o n a l i n s t i t u t e s f o r a c c o u n t i n g an d o t h e r b u s i n e s s d i s c i p l i n e s in t h e s e v e n t i e s a n d e i g h t i e s . T h i s is e v i d e n t f r o m t a b l e 3.
V o l . 4 . N o . 1. M a r c h 1 9 9 6 © C e n t r e f o r In d o n e s i a n A c c o u n t i n g an d M a n a g e m e n t Re s e a r c h
50 T h e In t e r n a t i o n a l Jo u r n a l o f A c c o u n t i n g an d Bu s i n e s s So c i e t y
T a b le 3 Accounting Courses Available At Higher Educational Institutions In Hioecs
Co u n t r y Universit y/
Depart m ent / Facu lt y Inst it ut e
Year
ent ablish
where account ing courses are availab le
ed
Ba h r a i n University of
Br u n e i University of
D e p a r t m e n t o f Bu s i n e s s St u d i e s Tecnology Br u n e i
Kuwait Kuwait
of Commerce, Ec o n o m i c s an d University
College of
St u d i e s
Oman Su l t a n
D e p a r t m e n t o f Bu s i n e s s M a n a g e m e n t Qaboos University
Qatar University of
of Administrative Sc i e n c e an d Qatar
C e n t e r o f Bu s s i n e s s Administration an d Unversity
Ec o n o m i c s
of Administrative Sc i e n c e an d Unversity
C o l l e g e o f In d u s t r i a l M a n a g e m e n t Unversity of Pe t r o l e u m an d M i n e r a l s
King Abdui
. . o n o m i c s an d A d m i m s f a t k ' Aziz v . n i v cr -
,,r
haci.it.> .
So u r c e : In t e r n a t i o n a l H a n d b o o k o f U n i v e r s i t y . 1 9 9 1 . H i g h e r Ed u c a t i o n St a t i s t i c s f o r t h e ( i u l f St at es . 1988-1989
Theoretical basis for explaining the development o f accounting in H IO ECs
It is c l e a r f r o m t h e a b o v e d i s c u s s i o n t h a t t h e ' Sp h e r e s o f In f l u e n c e '
h y p o t h e s i s b as ed o n c o l o n i a l i s m d o e s n o t p r o v i d e a t h e o r e t i c a l b a s i s f o r e x p l a i n i n g t h e d e v e l o p m e n t o f a c c o u n t i n g s y s t e m s an d a c c o u n t i n g e d u c a t i o n in H I O E C s . T h e r e f o r e , as s u g g e s t e d b y W a l l a c e (1 9 9 0 ), it is n e c e s s a r y t o l o o k f o r o t h e r explanations.
Vol. 4. No. I. March 1996 © C e n t r e f o r In d o n e s i a n A c c o u n t i n g an d M a n a g e m e n t Re s e a r c h
A n o t h e r e x p l a n a t i o n k n o w n as ' v o i d t h e o r y ' s u g g e s t s t h a t a c o u n t r y w i t h n o organized body of accounting principles would imitate the accounting system of
a n o t h e r c o u n t r y ( W i l k i n s o n , 1 9 6 5 ). T h i s t h e o r y a l s o p r o v i d e s p a r t i a l e x p l a n a t i o n t o t h e s i t u a t i o n in H I O E C s o n t h e g r o u n d s t h at as t h e r e w a s n o o r g a n i z e d a c c o u n t i n g profession before the oil boom they quickly adopted the American accounting s y s t e m . H o w e v e r , n o n e o f t h e ab o v e t h e o r i e s s e e m s t o b e c o m p r e h e n s i v e e n o u g h t o
e x p l a i n a l l a s p e c t s o f t h e d e v e l o p m e n t o f a c c o u n t i n g s y s t e m s an d a c c o u n t i n g
e d u c a t i o n in H I O E C s . T h e d e v e l o p m e n t o f a c c o u n t i n g i n t h i s g r o u p o f c o u n t r i e s is
e s s e n t i a l l y a r e s u l t o f t h e i n f l u e n c e o f s e v e r a l e c o n o m i c f a c t o r s s u ch as m u l t i n a t i o n a l enterprises,
financial institutions, expatriate accountants and foreign technology.
international
accounting firms,
international
Conclusions
O u r a n a l y s i s o f t h e r a p i d e c o n o m i c a c h i e v e m e n t s o f H I O E C s an d t h e corresponding effect on the development of their accounting systems and accounting
e d u c a t i o n s u g g e s t s t h at e c o n o m i c d i f f e r e n t i a t i o n n ee d s t o b e t a k e n i n t o a c c o u n t in
a n y r e a l i s t i c c l a s s i f i c a t i o n o f T h i r d W o r l d a c c o u n t i n g . It a l s o s h o w s t h a t b e c a u s e o f t h e e n o r m o u s i n f l u e n c e o f t h i s d i f f e r e n t i a t i o n o n t h e d e v e l o p m e n t o f a c c o u n t i n g in T W C s , t h e u n i f i e d v i e w o f T h i r d W o r l d a c c o u n t i n g is n o l o n g e r a p p r o p r i a t e a n d r e s e a r c h n e e d s t o b e d i r e c t e d t o w a r d s a c c o u n t i n g in d i f f e r e n t e c o n o m i c g r o u p s o f these countries.
It is s een t h a t as a r e s u l t o f t h e r a p i d e c o n o m i c c h a n g e s t a k i n g p l a c e a f t e r t h e o i l b o o m t h e d e v e l o p m e n t o f a c c o u n t i n g s y s t e m s an d a c c o u n t i n g e d u c a t i o n in
H I O E c s h as b e en c o n c e p t u a l l y d i f f e r e n t f r o m t h a t o f o t h e r T W C s . T h e r e f o r e , t h e 's p h e r e o f i n f l u e n c e ' m e t h o d o l o g y w h i c h h as b e en u sed b y s o m e w r i t e r s f o r
e x p l a i n i n g t h e d e v e l o p m e n t o f a c c o u n t i n g i n T W C s is n o t a p p l i c a b l e t o H I O E C s . Unlike other TWCs, the development of accounting systems and accounting
e d u c a t i o n in t h i s p a r t i c u l a r g r o u p o f c o u n t r i e s is n o t an o u t c o m e o f s u c h h i s t o r i c a l
f a c t o r s as c o l o n i a l e x p e r i e n c e a n d / o r c o l o n i a l a f f i n i t y . In s t e a d , it is a r e s u l t o f t h e
i n f l u e n c e o f a n u m b e r o f e c o n o m i c f a c t o r s s u c h as m u l t i n a t i o n a l e n t e r p r i s e s , international
institutions, expatriate accountants and foreign technology.
Vol. 4. No. I. March 1996 © C e n t r e f o r In d o n e s i a n A c c o u n t i n g an d M a n a g e m e n t Re s e a r c h
T h e D e v e l o p m e n t o f A c c o u n t i n g Sy s t e m s a n d A e c o u r t i n g Ed u c a t i o n ... 53
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Vo l. 4, No. 1, March 1996 © Centre for Indonesian Account ing and Managem ent Research