Part 1 The framework created by Professor Sidney Gray in 1988 to explain the development of a country's accounting system is presented in the chapter in Exhibit 2.8. Gray theorized that culture has an impact on a country's accounting system through its influence on accounting values. Focusing on that part of a country's accounting system comprised of financial reporting rules and practices, the model can be visualized as follows:

Required:
Discuss the implications for the global convergence of financial reporting standards raised by Gray's model.
PART II
Although Gray's model relates cultural values to the accounting value of conservatism as it is embodied in a country's financial reporting rules, it can be argued that the model is equally applicable to the manner in which a country's accountants apply those rules:

Required:
Discuss the implications this argument has for the comparability of financial statements across countries, even in an environment of substantial international accounting convergence. Identify areas in which differences in cultural dimensions across countries could lead to differences in the application of financial reporting rules.
PART III
Cancan Enterprises Inc. is a Canadian-based company with subsidiaries located in Brazil, Korea, and Sweden. (Hofstede's cultural dimension index scores for these countries are presented in Exercise 4.) Cancan Enterprises must apply Canadian GAAP worldwide in preparing consolidated financial statements. Cancan has based on Canadian GAAP that are to be applied by all the company's operations. Each year Cancan's internal auditors have the responsibility of ensuring that the company's accounting policies have been applied consistently companywide.
Required:
Discuss the implications that the model presented in Part II of this case has for the internal auditors of Cancan Enterprises in carrying out their responsibilities.

Financial reporting rules and practices Cultural dimensions Accounting values Accountant's application of financial reporting rules Cultural dimensions Accounting values bk