Cultural and environmental influences on the financial accounting system : a case study of the Czech Republic
Accounting change occurred in the Czech Republic as a result of the political revolution in 1989 which heralded the resurrection of democracy and the re-establishment of a market economy. The Czech Republic is gradually rebuilding the framework within which companies are able to compete efficiently. These events present an ideal opportunity to examine the process of development of an accounting system using theories of international accounting. The aim of this study is threefold: (1) to assess whether international accounting literature is able to predict the accounting system of the Czech Republic using theories of environmental influence, (2) to operationalise Gray's (1988) theory of cultural influence in the development of the Czech Republic's accounting system, and (3) to critically review the present accounting system in the Czech Republic in order to establish if the accounting system has developed independently of the environment in which it exists. The research design combines qualitative (interviews) and quantitative (questionnaire survey) methodologies within a case study of the current financial accounting system in the Czech Republic. The findings indicate that theories of cultural and environmental influence are capable of predicting the broad structures of the Czech Republic's financial accounting system based on an historical knowledge of the country's political economy. Further, the surveyed position of the Czech Republic on Hofstede's (1980) four dimensional model of cultural values and the transposition of these into accounting values (Gray, 1988) have supported the theory of cultural influence.