Accounting Theory -Harmonization of Standards

2779 WordsJul 2, 201212 Pages
Harmonization of International Accounting Standards Contents A. Introduction & Objective.……………………………………………………………….3 B. Why Harmonization of international accounting standards required……………..4 C. Factors influencing any Country’s Accounting Standards…………………………..6 D. Role of International Accounting Standard Board (IASB)……………….…………..8 E. Moving towards Harmonized International Accounting Standard………………….9 F. Obstacles and Benefits of the harmonization of International Accounting………..10 G. Conclusion………………………………………………………………………12 H. Recommendation……………………………………………………………….13 I. Research Reference………………………………………………………………………....14 A. Introduction & Objective Objective of this research…show more content…
In their quest for higher returns and cheaper financing, they have to consider international alternatives. In order to evaluate these alternatives intelligently they need reliable and comparable information. The subsidies locate in different countries, need to prepare financial statements in accordance with the accounting standards of the live-in country, also a set of financial statements to comply with the standards of parent company’s country. C. Factors influencing any Country’s Accounting Standards Accounting, as a language of business, exists in every country to meet the record-keeping and financial information needs of the commercial sector. Accounting practices are varied among countries. The main five factors that influence the development of a country’s accounting standards are discussed below. Country Specific Cultures Culture of countries influences Accounting Practices as well. Authors like, for example, Nobes and Parker, Roberts et al. refer to the study of Hofstede in order to explain how national culture could influence Accounting Practices of countries. Hofstede compared cultural behavior in an American company, which was represented in over 50 countries. His aim was to define characteristics of national culture with help of the four following dimensions; - Large versus small power distance, Strong versus weak uncertainty avoidance, Individualism versus collectivism
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