Comparative study of accounting practices is an emerging issue in research. This is not surprising because of two important reasons, firstly in order to move towards a complete harmonization, understanding of different accounting practices is essential and secondly with globalization companies need to have acquaintance of the prevalent accounting system in the target country.

Does different accounting practice mean different bottom-lines for corporate? It does, like the case of Infosys. The company reported net profit of Rs. 273 crore as per US accounting system and Rs. 301 crore as per the Indian accounting system. (Annual report of Infosys, 2001). The center for accounting research and education found that this is broadly due to different norms related to amortization, deferred tax adjustments, dividend payment, stock compensation etc.

THE RESEARCH

Keeping this in view the researcher (a chartered accountant working as an academician and based in Dubai) took the humble step to research about the difference in accounting practices and opinion about harmonization in banking companies of India and UAE. The objectives of the study were to analyze the different accounting practices in banking companies of India & UAE, study the issues responsible for differences in accounting practices and evaluate the implication of harmonization in accounting practices on various stakeholders of business. The data sources used have been both primary and secondary. Annual reports for years 2000 to 2004, websites, other literature of 5 banks each in UAE and India were analyzed. A sample of 340 Bank employees, Government officials, Shareholders and Potential FDI investors were administered self-designed questionnaire. The hypothesis testing was done using chi-square test and percentage analysis.

RESULTS

1) On overall basis there are not many differences between accounting practices in UAE and Indian banks. It is more because of the fact that both are coming close to IAS every year.

2) The difference between accounting practices in UAE and Indian banks were higher in Year 2000 compared to 2004.

3) However significant accounting differences exist in case of Islamic banking. This is more because of nature of Islamic banking to not consider payment or receipt of interest.

4) Even though the differences are not much, the disclosures are better in Indian banks. This is further evident from looking at the enclosed annual reports in the annexure.

5) There are no mandatory requirements in UAE banks for implementing accounting standards.

6) The non-existence of regulatory authorities (like ICAI in India) may create problems in long run.

7) The auditors report to the members of Indian banks more specific in reporting.

8) While comparing, UAE employees in general feel that their banks are more shareholders friendly.

9) While comparing, Indian Govt. Dept. officials in general feel that their banks are more shareholders friendly.

10) While comparing, Potential FDI makers (India) in general feel that Indian banks are more shareholders friendly.

11) While comparing, UAE shareholders in general feel that their banks are more investor friendly.

12) There does not seem to be much difference in fixed asset accounting in India and UAE.

13) There does not seem to be much difference in revenue accounting in India and UAE.

14) Indian employees feel that differences between accounting practices in India and UAE are more because of I, S, Lg, P, T, Tp, In, E, and A. Within culture, L and M have least impact. Further all the remaining factors seem to be equally responsible.

(Note: The abbreviations used are as under:

a) I stands for Individuals v/s Power distance

b) L stands for Large v/s Small Power distance

c) S stands for Strong v/s weak uncertainty

d) M stands for Masculinity v/s Femininity

e) Lg stands for Legal System

f) P stands for Providers of Finance

g) T stands for Taxation

h) Tp stands for The profession

i) In stands for Inflation

j) E stands for Education level

k) A stands for Accounting)

15) UAE employees feel that differences between accounting practices in India and UAE are more because of I, L, S, M, P, Tp, In, and E. Within culture, L and M have least impact. Further all the remaining factors seem to be equally responsible. Within culture, no factor has a lower impact. Further all the remaining factors seem to be equally responsible.

16) Indian Govt. Dept. officials feel that differences between accounting practices in India and UAE are more because of I, S, Lg, P, T, Tp, In, E, and A. Within culture, L and M have least impact. Relatively Lg is given lesser importance. Further all the remaining factors seem to be equally responsible.

REFERENCES:
Abdallah, A., 1987. 'Islamic banking', Journal of Islamic Banking and Finance, January-March, 4(1): 31-56.
Abdel-Magib, M.F., 1981. 'Theory of Islamic banks: accounting implications', International Journal of Accounting, Fall: 78-102.
 
Ahmad, Sheikh Mahmud, l952. Economics of Islam, Lahore :19-67
Al-Arabi, Mohammad Abdullah, l966. 'Contemporary banking transactions and Islam's views thereon', Islamic Review, London, May l966: l0-l6.

Belverd E. Needles, Powers Marian, Susan Crosson : Principles of Accounting, (August 2001): Houghton Miffin college
Bruyne, D.De., Global Standards: A tower of Babel ? Financial Executive, Vol. 54, pp. 30-37, February 1980

Dr. Namrata Gupta
Chartered Accountant
Dubai