Harmonisation of Accounting Standards
Harmonization of International Accounting standards Need for Harmonization of International Accounting standards Introduction As there has been a tremendous growth in the market place with the existing accounting practices, this leads us to question why do we need harmonization of International accounting standards, what are Its advantages and what are the barriers that hinder harmonization?
Although accounting may be the “language of business,” a common language has never been necessary at least as long as the world economy consisted of a set of more or less distinct national economlee Mednick 1991) (Cited in: www. wetherhead. cwru. edu) This, however, is no longer true. We now have a global economy and it has affected the entire business world. For instance, todays global corporation may have more than one headquarters, and its production and distribution facilities are probably scattered throughout the world.
Commodity prices, Interest rates and currency exchange values have become Internationally linked with the result thet governments around the world are Increasingly supporting harmonization of accounting practices and national policies. Walters) (Cited In: 81sgay and Jayson 1989) Harmonization Is necessary because standard national financial statements are virtually useless; financial markets in more regulated countries are threatened with a loss of market share; and multinational corporations must prepare multiple reports for different nations they do business in. Nobes and Parker 1991