Accounting Essay

Decent Essays
1. A brief history of the two organisations, and their objectives, in as far as they relate to accounting practices regionally and/or internationally, as necessary.

1.1 European Union (EU)

1958 - EU was formed following by the Treaty of Rome
Global trading has impacted the treaty to develop standards that support unrestricted market activities internationally. Uniformed accounting standards are required regionally to encourage the capital flow, enhance stakeholders’ protection, and increase the comparability and reliability of companies’ financial information (Donnelly, 2007).


and 1980- EU



foundation of Accounting

Harmonisation through company law
The purpose of EU is to construct the common business
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The comparability will remove the general confusion about the reliability of international financial reports. Van de Tas (1988) pointed up that it would be beneficial for Stakeholders who are loaded with tremendous business information. Comparability in the international accounting harmonisation will contribute more relevant information that may promote the productiveness of the financial markets, which will enhance the quality of Fair Value Accounting figures (Barlev and Haddad, 2007).

As emphasised by Nair and Frank (1970) that the distinctiveness of the accounting practices could constitute barriers to the international publication of accurate financial data.

Comparability of international and national standards could improve the credibility of the financial information provided by the entities of the public sector worldwide (Otavova, 2011).


2.3 Increase the confidence of stakeholders
In harmonisation, the preparation of financial statements is presented and directed toward a wide range of users with the common financial information.
Therefore, it could reduce the complications for stakeholders in comparisons of the annual reports and cost of capital will ultimately decrease. Schaub
(2005) mentioned that it will increase market efficiency, reduce cost of capital for listed firms, and spur the growth in investment and employment.

It could create intelligible reports for the MNEs on the possibility of acquisitions, mergers or even joint ventures with
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