Benevite Ltd - Brazilian Subsidiary Introduction

Benevite Ltd

WIL Report A

By Cherise Schiavone

Benevite Ltd

WIL Report A

By Cherise Schiavone

Benevite Ltd

By Cherise Schiavone

The aim of this report is to analyse the way in which the culture and societal values of Brazil has helped to form their current accounting system in accordance to Sidney Gray and Geert Hofstede’s research. In addition, it will compare the financial reporting and disclosure requirements with Australian practices to identify any potential consequences of introducing a Brazilian subsidiary company on the Brazilian stock exchange, and how this may pose threats to the eligibility and truthful presentation of consolidated financial reports.

development of the Brazilian accounting system

Gray's theoretical framework proposes that cultural values evident within a particular society lead to the development of accounting standards which influence the construction of that nation's accounting system. In addition to Gray’s research, is Geert Hofstede’s studies of cultural values which gives us a clear indication of a nation’s accounting system.

In accordance to Gray and Hofstede’s research, Brazil meets the second hypothesis which states that a high ranking in uncertainty avoidance (76) and power distance (69) combined with a low score in individualism (38) indicates that Brazil will rank highly in uniformity (Hofstede, Unknown). This is depicted through a more rigid set of behavioral codes of conduct and a higher level of conformity, accompanied by a greater acceptance of government rules and regulations (Deegan, 2014).

Brazil also meets the third hypothesis (Gray, 1988) as they scored highly in uncertainty avoidance (76) yet low in individualism (38) and masculinity (49), which leads to the belief that conservatism is greatly present among its people. High levels of conservatism symbolizes a more conventional calculation of assets and liabilities, and a more cautious dealing of the unknown. However by satisfying this hypothesis, it...