Harmonization of Accounting in Accounting Context

(a) Briefly explain what prompted some countries over the world to strongly advocate harmonization of accounting. The important reasons which necessitate harmonization of accounting practices are well contained in the observation made by Saudagaran. â€Å"While the initial efforts at harmonization were mainly championed by political bodies and professional accounting organizations, current pressures to harmonize are driven by investor groups who use financial statements, multinational companies which prepare financial statements, regulators who monitor capital markets, the securities industry (including stock exchanges) which view itself as being significantly impacted by the global diversity in financial reporting requirement, and developing†¦show more content†¦Another term, distinguished from harmonization, is standardization. It describes â€Å"a process by which all participants agree to follow the same or very similar Accounting practices. The end result is a state of uniformity† (Roberts et al., 1998) This state of uniformity is a condition in which everything is regular, homogenous or at least unvarying. (Samuels and Piper, 1985) Choi et al. claim that standardization implies that all Accounting principles and practices are the same. He describe standardization as â€Å"imposition of a rigid and narrow set of rules, and may even apply a single standard or rule to all situations† (Choi et al.,2002:291). The terms, harmonization and standardization, are often used in the same meaning. However, Kleekà ¤mper et al. detect that there is a difference between these two terms (Kleekà ¤mper et al, 2002). Standardisation is a process in which all countries should adopt the method of one country. In contrary, harmonization is understood as a reconciliation of different points of view. (Wilson in Riahi-Belkaoui, 2000) (c) Identify and explain the advantages of international harmonization. There are various advantages to harmonization. First, for many countries, there are still no adequate codified standards of accounting and auditing. Internationally accepted standards not only would eliminate the set-up costs for those countries butShow MoreRelatedThe Importance Of Accounting Standards For Business Affairs1049 Words   |  5 Pagesthat’s understandable globally and comparable across the international boundaries. IFRS initially was formed to harmonize accounting across European Union, but the value of harmonization was so overwhelming and attractive around the world that became a benchmark globally. Importance of Accounting Standards In this assignment I want to explain the importance of the Accounting standards. As the world economy is becoming integrated and globalization is becoming a universal phenomenon, more and moreRead MoreThe Inevitability of International Accounting Harmonization2313 Words   |  10 Pagesof the world is now in the process of globalization. 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