Standardisation of accounting practices in the developing countries : the case of Kuwait
This study examines the causes, nature and consequences of deficiencies in Kuwait accounting; evaluates the accounting guidelines introduced in January 1987; and recommends a new approach for regulating accounting in Kuwait, to remedy the present deficiencies. After reviewing the theory related to accounting standardsetting, we examine in detail the laws affecting the Kuwaiti accounting profession, and the accounting practices currently employed. It is shown that inadequate, piecemeal regulation, a weak profession, and the lack of a sound theoretical base founded on the characteristics and needs of the local environment, have resulted in ambiguity, and diverse practices. The information provided is therefore not sufficiently reliable and comparable to meet users' needs. These assertions are supported by presentation and statistical analysis of the findings from an empirical survey of the views of users and preparers of financial information. A number of hypotheses are tested, related to the objectives and nature of financial information, and ways of improving the system. We recommend greater uniformity in Kuwaiti accounting, and submit detailed proposal for reorganisation of the profession, including the creation of a new independent regulatory body.