ABACUS, Vol. 31, No. 1, 1995 NABIL BAYDOUN AND ROGER WILLETT Cultural Relevance of Western Accounting Systems to Developing Countries It has been suggested recently that the accounting systems used in developing countries may be irrelevant to their needs because they originate in Western countries with different cultural values. The accounting literature on this point, however, is vague in its assessment of exactly what aspects of Western accounting systems fail to meet the test of relevance. Furthermore, it is not clear whether the differences between the needs of users in various countries are differences in kind or only differences in degree. This article analyses these issues by introducing technical considerations in addition to the behavioural ones usually discussed and by separating out problems of accounting measurement from problems of accounting disclosure. This distinction is used to argue that it is the specific disclosure rules of particular calculations inherent in Western accounting systems rather than the transaction cost database that are most likely to fail to satisfy the needs of users in developing countries. The effect of the importation of the French Unified Accounting System to Lebanon is examined and an amended version of the Hofstede-Gray cultural accounting framework is used to clarify the concept of cultural relevance. Key words: Accounting theory; Culture; Disclosure; Measurement. In recent years increasitig attentioti has been paid to the cultural dimension of accounting (Gray, 1988; Tay and Parker, 1990; Hamid et al., 1993). AlHashim and Arpan (1992) argued that the needs of users are influenced by environmental factors specific to the locality in which their decisions are made. Similarly, according to Perera (1989a), accounting practices evolve to suit the circumstances of a particular society at a particular time. However, many developing countries have adopted accounting systems from Europe and North America (Briston, 1978). Consequently it is difficult to judge the validity of these arguments directly. A number of studies have been carried out to assess the impact of Western accounting systems on individual developing countries (e.g., Briston and Liang, 1990; Briston and Wallace, 1990; Parry and Grove, 1990) and others have undertaken comparative analysis of two or more developing countries (e.g., AICPA, 1964,1975; Briston, 1990). Consensus is lacking as NABIL BAYDOUN is Lecturer in Accounting, City Polytechnic of Hong Kong, and ROGER WILLETT is Professor in Accounting, University ot Otago. The authors gratefully acknowledge the helpful comments of Alan MacGregor, Rob Gray, Hector Perera, Ng Su-May, Jill McKinnon and members of staff in the Department of Accountancy at Otago University. 67