Most third world countries lack many of the resources that most industrialized countries, such as the United States, possess. One of the many things they lack would be the knowledge and practice of efficient accounting standards and systems. These countries are the ones with many other problems in common, such as low national income per capita, low living standards, and high levels of unemployment. Today, third world countries are divided into different categories: “Newly Industrialized Countries” (NIC), “More Developed Countries” (MDC) and “Less Developed Countries” (LDC). NICs describe countries that fall somewhere between an industrialized country and a third world country. Countries in this category are typically characterized by rapid export-led economic growth and a migration of workers from rural to urban areas. They share many similar features of underdeveloped countries, but seem to move more in the direction of developed countries. MDCs would be countries that are above LDCs but below NICs in terms of gross national income per capita, economic growth, and other measures. LDCs refer to countries that are truly lacking in all the areas that help build economic growth. These countries represent less than 2% of world GDP and 1% of world trade in goods (UN-OHRLLS). As stated above, the countries in each of these 3 categories have much in common that classifies them as a certain type of third world country.

With regard to accounting, these countries face many similar problems, such as poor internal control, no management accounting, incomplete/inaccurate records, and more. A published paper breaks down these aspects of accounting in developing countries into 4 components: Business, Government, Education and Profession. The business component describes the accounting problems of private companies in developing countries. This mainly revolves around the lack of qualified personnel to perform accounting tasks such as auditing and bookkeeping. This problem is compounded by a lack of cost accounting skills needed to properly prepare financial statements and annual reports, leading these companies to seek outside accounting assistance. The governance component relates to local and national governments in developing countries and their weaknesses in accounting. Their problems stem from the use of outdated accounting methods, such as the cash method. As well as the problems with private companies, governments show a lack of qualified personnel to meet the country’s financial obligations. This will lead to poor internal control systems, inefficient management, and will eventually affect foreign trade if the country’s financial records are not properly prepared. Poor records can also be attributed to irregular information in terms of the economic position of the country. The education component explains the lack of resources to adequately educate students in developing countries who are pursuing an accounting degree. These resources include textbooks, curricular content, and once again, the lack of qualified personnel to teach students. The last component deals with the accounting profession in general in third world countries. Most of these countries do not have a professional body or standards for doing things. Without the proper guidelines and training for the accounting profession, citizens of these countries who work in the accounting field will not be suitable for any accounting position. As another result, this contributes to the high lack of qualified personnel to teach accounting students and perform efficient accounting tasks for public and private companies. (Jumper)

Some solutions to these accounting challenges can be defined by first looking at the history of accounting in developing countries. Most of these countries have been using accounting methods that are outdated. Furthermore, we know from the 4 components described above that the main causes of bad accounting practices in developing countries are the lack of qualified accountants and inadequate internal controls, but another main cause would be the lack of importance given to this topic compared to other topics. the country may be struggling. In order to find solutions to their problems with proper accounting standards, developing countries must first attach a higher level of importance to solving these problems. Only after that, these countries may be willing to seek help from accounting professionals from developed countries. These professionals would have the necessary skills and knowledge to properly educate third world citizens who are pursuing an accounting degree. Taking these first two steps will open up more opportunities for schools and businesses in developing countries to expand their accounting and finance programs using more modern and useful accounting standards and techniques.