All of the Arab countries in this study have at one time been under Western powers control. At the end of the 19th century, as the Ottoman troops began laying down their weapons, the Allies were in full control of the disposal of Ottoman territory.8 The long-standing Western colonial presence and influence in the area has, to a large extent, shaped accounting systems in
these countries. As is the case of many countries that were at one time part of the British or French Empire, these countries found that when they achieved their independence they had a professional accounting body and companies’ legislation based on the British (or French) models (Briston, 1990). In Egypt, for example, as a result of the British colonial influence from 1882 to 1956, the training of accountants, the organisation of the accounting profession, the law regulating companies, disclosure standards and the financial reporting practices were based on those of the UK (Samuels & Oliga, 1982). The Egyptian accounting system, developed in this manner, was passed on to the Syrians through the United Arab Republic (UAR), and to Saudi Arabia and other Gulf States through Egyptian experts working there (Al-Rehaily, 1992).9After independence, at the end of WWII, the majority of AME countries in this study, like the Gulf States and Jordan, remained absolute monarchies, ruled by the same families appointed by the British during their rule in the area (Cleveland, 1994;
Anderson, 2000). These countries maintained close relations, especially economic ones, with Britain and the West. They also undertook or adhered to development and economic programmes prescribed to them by Western experts, whether working in multinationals operating in these countries, including accounting firms, or in international organisations such as the World Bank and IMF. Even countries like Syria and Egypt, which after independence formed a Pan-Arab, socialist Republic, have in recent decades taken major steps in moving away from the central government policies and opening up to the free market ideology and foreign capital. Indeed all of the Arab states in this study have been moving steadily away from central economic planning to market economy and open door policies. Striving to participate in the global economy, Arab states are taking major steps in enhancing the private sector role in the economy, developing foreign business and economic liberalisation and, in many cases, privatisation programmes. A number of Arab countries have undertaken IMF and World Bank development programmes, such as Egypt and Jordan, for guidance on economic liberalisation. Egypt became the first Arab nation to experiment with economic liberalisation and privatisation, from the mid-1970s onwards (McKee, Garner, & McKee, 1999).10Similarly, in Saudi Arabia and other Gulf Council Countries (GCC), private sector investments are encouraged and recent development plans are giving priority to privatisation programmes, increasing the number of workforce in the private sector and bringing about greater private sector participation in infrastructure and offer development projects. Syria is the last of the Arab states to bring about economic liberalisation and reforms, with these reforms accelerating after
the death of late President Hafez Al-Assad and the succession of his son Bashar (McKee et al., 1999; Lopez-Claros & Schwab, 2005; Europa Regional Surveys of the World, 2005).
In this context, the influence of Western accounting systems on AME countries continued even after independence. Perhaps the most obvious evidence of this Western influence is the widespread adoption of international accounting standards in all countries in this study. In Egypt, as a response to the opening up policy and the increased importance of international trade and business, along with the effect of the IMF and World Bank programme, the accounting profession saw the advantages of adopting international standards (Abd-Elsalam & Weetman, 2003). Furthermore, after the introduction of the new stock exchange in Egypt, the profession increased its collaboration with international audit firms and multinational business hoping that an adoption of the same principles and practices of these international bodies would make things easier (Samuels & Oliga, 1982), and would encourage further foreign investment coming to Egypt. Similarly in Jordan, Naser and Abu-Baker (1999) argue that the implementation of the IMF privatisation programme encouraged the Jordanian professional accounting body (JACPA) to adopt IASs. In Bahrain, Oman and Kuwait, IASs have been adopted as national standards (IASB, 2005). Other countries in the study, while not having IASs as a mandatory requirement, are basing their accounting practices on either IASs or US/UK standards. Saudi Arabia, for instance, while not having legislation enacted that would set accounting standards, is using ‘divergent methods’ to prepare financial statements following US/UK or international standards (McKee et al., 1999).
Furthermore, in Saudi Arabia, the appointment of auditors requires in the majority of cases membership in a professional organisation in the UK or in the US (Islam, 2003). Countries such as Qatar and United Arab Emirates (UAE), which do not have accounting principles or practice requirements stated in their legislation and have not constituted a body to set and enforce audit and accounting standards, generally follow international accounting standards (McKee et al., 1999). Another boost for the use of international accounting standards in the AME came from the encouragement of the Arab Society of Certified Accountants (ASCA) to use IASs.11 The ASCA, whose importance is on the increase today as a result of increased regional business agreements among Arab countries (Hussain, Islam, Gunasekran, &
Maskooki, 2002), has devoted huge efforts to the translation of international accounting and auditing standards into Arabic (Abd-Elsalam & Weetman, 2003).12The ASCA, rather than employing efforts for developing accounting standards that would be suitable for the AME context, has embraced and
encouraged AME countries to adopt IASs. Joshi and Ramadhan (2002) cite Choi et al.’s (1999) claim that IASs are adopted in different non-Western countries, including Arab ones, as a result of either international or political agreements, or encouragement from professional bodies to comply with IASs.
They explain that the wider acceptance of IASs in the non-Western world is due to a number of factors. Joshi and Ramadhan (2002) explain that these factors include the notion that IASs are used as an international benchmark by the EU and other international bodies such as the IMF, as well as the fact that many stock exchanges such as London, Frankfurt, Rome, Hong Kong and Thailand, and regulators accept financial statements that are prepared in accordance with IASs.13Joshi and Ramadhan (2002)suggest that many non- Western nations, including the Arab ones, are trying to achieve harmonisa- tion in reporting practices in conformity with that of Western countries. Such a significant Western influence and dominance on accounting practices, training and education in the AME could, as Briston (1990) cautions, be harmful to these countries. For a start, these countries have adopted accounting principles and systems of accountancy training that originally evolved to meet the needs of UK capitalism a century ago. Further, it must be borne in mind that a particular system evolved in a particular economic environment and that it may well need considerable adaptation to meet the needs of a particular country (Briston, 1990; Nobes, 1998). The Western accounting system mainly presupposes that the bulk of economic activity is carried out by companies financed by private shareholders and whose shares are listed in a local stock exchange. This, however, is not the case in most postcolonial, non-Western countries, where the bulk of investment is in public sector companies and, therefore, very different criteria for measure- ment and reporting need to be developed. For instance, many countries that were under the colonial influence of Western powers, after gaining their independence, moved to nationalism and a centrally planned economy, departing significantly from the Western economic and political systems.
State-owned enterprises came to dominate large segments of many postcolonial economies (Maunders, Gray, & Owen, 1990). Despite moves towards market liberalisation, the state role in the business environment in these countries is the most significant (Lopez-Claros & Schwab, 2005).
Samuels and Oliga (1982) argue that accountants cannot, therefore, ignore the requirements for economic decision making in respect of the different postcolonial environments with its information requirements that differ from those of shareholders and bankers in a Western context dominated by the private sector. There is also the likelihood in this respect that the political and economic systems would be very different from those of
the US and the UK, so that the objective of economic management might well be different. In addition, Samuels and Oliga (1982) explain that particularly in the case of the AME, religion may have a significant influence on financial and economic reporting, which is largely ignored in Western accountings, including IASs.
It is clear, therefore, that accounting in the UK and the US does not significantly satisfy the role that accounting should play in these non- Western societies, as it almost entirely concentrates on the private enterprise sector, and even there, the emphasis has been on financial accounting to the virtual exclusion of social accounting. Briston (1990) explains that an analysis of the predominant UK and US accounting and auditing standards demonstrates that they are concerned only with the problems of corporate financial reporting and the auditing of annual financial statements, while the information needs of ‘‘managers, of the government administration sector, and of government planners’’ are not regarded as the concern of accounting standards. Similarly, in the case of IASs,Rahman (1988, p. 365)explains that while the IASB claims itself to be the ‘only’ world-wide body setting accounting standards, it seems never to have thought of considering non- financial reporting as a ‘possible candidate for its pronouncements’. He elucidates that reason behind this resistance is that according to the established value judgements of those Western capitalistic societies, any extension of corporate social responsibility and development of non-financial reporting is considered to be a radical ‘left-wing’ idea and constitutes a political threat to the powerful vested interest groups. For Wallace (1990), financial statements that are predicated on the standards of the IASB can be perceived as deficient for determining the extent of the contribution made by a reporting company to the social and economic development process in a country. Accordingly, Wallace (1990) stresses that the interests of govern- ment and society, especially in the case of non-Western postcolonial countries, should be given greater attention than at present in international accounting standards.
The Western and capitalistic nature of IASs raises doubts over their
‘international’ character. Furthermore, the insistence of MNCs and international governance organisations, such as the World Bank, on promoting and demanding the use of IASs by non-Western, postcolonial countries also raises questions about the IASs’ imperial role in the enhancement of the problematic neo-global order in the non-Western world.
For instance,Annisette (2004, p. 310)explains that the World Bank and the IMF institutional structures ‘‘compel them to support a pro-capitalist development ideology’’ (see alsoMonbiot, 2003). In this context, the role of
the IMF and World Bank in promoting ‘international accounting standards’, Annisette (2004)argues, requires an ‘‘urgent critical enquiry into the role of these ‘‘international’’ standards in a development context’’.
Consequently, the way that accounting is regulated and developed in the nine Arab countries included in this study and the main factors influencing their development indicate the lack of any regulatory requirements for social disclosures in any of the nine Arab countries. None of the nine countries have introduced regulations demanding disclosure that goes beyond the economic and financial activators and objectives of the organisation that are required in Western accounting systems (with the exception of Zakat disclosure required in Saudi Arabia). The dominance and influence of Western, especially UK and US accounting systems, on accounting practices