Get Your Custom Essay on Advantages and barriers of harmonizing International Financial Reporting Standards throughout the world Just from $13,9/Page Get custom paper One of the most valuable features that would come from harmonization would be the comparability of … Harmonizing Accounting Differences Across the Countries - Free download as PDF File (.pdf), Text File (.txt) or view presentation slides online. In an increasingly globalized world, it is clear that financial statements of companies operating under different accounting management systems are not easily comparable.

Investors seek diversification and investment opportunities across the world, while companies raise capital, undertake transactions or have international operations and subsidiaries in multiple countries. responsible factors: a. cultural differences b. relationship between business and capital providers c. political and economic ties with other countries d. QUESTION: Discuss the challenges of harmonization of accounting system.Accounting Standards are the statements of code of practice of the regulatory accounting bodies that are to be observed in the preparation and presentation of financial statements.The Generally Accepted Accounting Principles is comprised of a large group of individual accounting standards. The three main advantages of a single set of international accounting standards are (1) an increased comparability between firms, which reduces investor risk and facilitates cross-border financing and investment; (2) a reduction in the cost of preparing consolidated financial statements for multinational firms; and (3) the improved reliability and credibility of financial reports. Unlike country-specific standards such as the Unites States' GAAP (generally accepted accounting principles), international standards have no governing authority to enforce them, making them purely voluntary. Interestingly, accounting is conducted in different styles and formats in different countries round the globe and these differences reduce conformity in accounting records and influence the activities of MNCs. Our paper is motivated by the tension between the need for consistent strategy implementation in the different international business units of multinational companies and the traditional differences in management accounting practices across countries. Differences exist between IFRS and other countries' Generally Accepted Accounting Principles (GAAP) that affect the way a financial ratio is calculated.
Lack of harmonisation in different accounting standards developed by different countries also imposes financial burden on multinational corporations. Using a sample of non-U.S. firms that adopt U.S. envisions a borderless environment where accounting information is comparable across countries and is readily available to international users. Hennessy who is chairman of credit issue has observed that the cost of converting to US accounting standards is at least S 1 million for a major Japanese or British Company. The most fundamental of obstacles to achieving uniform practice is the size of the present differences between the accounting practices of different countries. Conversely, the accounting standards of Japan are bank oriented because companies rely on bank loans and not …

The authors develop a microeconometric method to account for differences across distributions of household income.
Need for Harmonization of Accounting Standards.

Choi & Meek (1999), concluded that harmonization eliminates differences between accounting practices, while standardization is inflexible which does not necessarily compile in all the situations. The International Accounting Standards Board sets accounting standards across the globe. The needs of accounting standards determine the accounting standards that a company will use, for instance, the United States and United Kingdom accounting standards are stock market oriented because the foreign firms based in these countries rely on the stock exchange as a source of finance. Existing international standards carry a number of distinct benefits to participants, and they serve as … country differences in accounting international accounting standerds committee is an international private sectors organisation that sets accounting standerds. Beyond Oaxaca-Blinder : accounting for differences in household income distributions across countries (English) Abstract. The need to deregulate financial markets has created a unified goal geared towards having uniform standards of accounting in order to help in the smooth flow of capital across economies and across the various global capital markets.


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