Background: Bolivia, which is the poorest country in South America, is in great need of support from other countries. The Swedish International Development Cooperation Agency (SIDA), as one of the country’s external contributors, has made plans to contribute to a project named Project 205, involving the introduction of a standardised chart of accounts and improved accounting regulations and institutions. This thesis, which is a proposed
advancement of Project 205, focuses on Bolivian small and medium sized companies.
Purpose and problem: The main purpose has been to investigate and discuss what would be an appropriate level of mandatory disclosure of accounting information for small and medium
sized companies in Bolivia. In order to reach this purpose, the authors have investigated both
the demand and supply of accounting information. That is, what accounting information do the most important external users demand from Bolivian small and medium sized companies and what are these companies’ prerequisites to account.
Method: In order for the authors to answer the research questions, a field study has been conducted in Bolivia during May and June 2004. In the study, the Bolivian lenders and the state have been considered as the most important external users that hence have been investigated according to their demand for accounting information. Theory has been used to make this selection, along with the selection of what factors to investigate regarding small and medium sized companies prerequisites to account. The selections are explained further in the
method chapter.
Result, analysis and conclusion: The investigation shows that at present, there is a large gap
between the users’ demand for accounting information and the small and medium sized
companies’ abilities to present the demanded information. The authors have however concluded that most lenders are willing to lower their demand, given that the small and medium sized companies’ accounting information is supported by a standardised and trustworthy accounting system. The authors think that the financial reports to legally require from the Bolivian small and medium sized companies should be as simple as possible and preferably only consist of a simplified cash flow statement and balance sheet and possibly
also a basic income statement. The authors have also identified three decisive requisites in order for the new Bolivian accounting system to function. First and far most, the accounting knowledge of small and
medium sized companies has to be improved through education, since they today lack both
technical and theoretical knowledge of how to account. A control organ is also of great importance in order to guarantee the reliability of the accounting. Ultimately, there is a need for changing the negative societal attitudes towards accounting in order to impede the enormo...
