Challenges of the Third World in Accounting

In most third world countries, there are not many resources owned by most industrialized countries, such as the United States. One of the many missing factors is knowledge and practice of effective accounting standards and systems. These are countries that share many national issues of low population densities, low living standards and high unemployment. Today, countries of the Third World are divided into different categories: "Newly Industrialized Countries" (NICs), "Advanced Countries" (MDCs) and "Least Developed Countries" (LDCs). NICs describe countries that are somewhere between an industrialized country and a third world country. Countries in this category are usually characterized by rapid economic growth driven by exports and migration of workers into rural urban areas. The backward countries have many similar features, but they seem to be increasingly targeting developed countries. MDCs would be countries that are above the Least Developed Countries, but are below NICs for gross national income per capita, economic growth and other measures. Least Developed Countries refer to countries that are really missing in all areas that help economic growth. These countries account for less than 2% of world GDP and 1% of global trade in goods (UN-OHRLLS). As mentioned before, the countries of each of these three categories have many common features as a certain type of third country country.

As regards accounting, these countries face a number of similar issues, such as poor internal audit, lack of management accounting, incomplete / inaccurate records, and many more. One of the published work breaks down the accounting problems of developing countries into four parts: business, government, education and profession. The corporate component presents the accounting issues of private-sector companies operating in developing countries. This is mainly due to the lack of qualified staff for carrying out accounting tasks, such as auditing and bookkeeping. This problem complements the lack of cost accounting skills required for the proper preparation of financial statements and annual reports, which leads these companies to seek external accounting assistance. The government component is linked to the local and national governments of developing countries and their accounting deficiencies. Problems come from the use of outdated accounting methods, such as the cash method. As well as the problems of private-owned companies, governments have insufficiently trained staff to meet the country's financial obligations. This leads to a poor internal control system, ineffective management, and eventually affects foreign trade if the country's financial records are not properly prepared. Poor registers may also indicate irregular information on the country's economic situation. The educational component explains the lack of resources to adequately educate students in developing countries who have an accounting degree. These resources include textbooks, content content, and again, the lack of qualified staff to teach students. The last element deals with the whole accounting profession of third world countries. Most of these countries have no professional body or norms to do things. In the absence of adequate guidelines and training in the accounting profession, the working population in the accounting field is not suitable for accounting positions. As a result, this contributes to the training of highly trained personnel for accounting students and accounting for private and public companies. (Springer)

Some solutions to these accounting challenges can be defined by first examining the history of the bookkeeping of developing countries. Most of these countries used outdated accounting methods. In addition, we know from the above 4 components that the main reasons for poor accounting practices in developing countries are the lack of qualified accountants and the lack of inadequate internal controls, but another major reason would be if the country deals with other issues. In order to find solutions to your problems with the appropriate accounting standards, developing countries must first attach greater importance to addressing these issues. Only then can these countries be willing to seek help from the accounting experts of the developed countries. These specialists would possess the skills and knowledge necessary to be adequately trained for third-world national accounting graduates. Taking the first two steps into account, there are more opportunities for schools and businesses in developing countries to expand their accounting and financial programs with modern and useful accounting standards and techniques

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