Harmonisation of accounting standards.

2398 WordsJun 3, 200310 Pages
Harmonisation of accounting standards International accounting harmonisation can be defined as "the process of bringing international Accounting Standards into some sort of agreement so that the financial statements from different countries are prepared according to a common set of principles of measurement and disclosure". Harmonisation means that deviating rules, which do not exclude themselves, can continue to exist next to each other. That means harmonisation does not focus on the elimination of differences but on the reduction of contradicting rules. the aim of the international harmonisation process of Accounting Standards is to reduce or overcome differences world-wide, in order to reach a better international comparability…show more content…
The disadvantages of such an implementation mainly consist of the costs of the implementation itself. For example, the necessary reform at tax authorities will be costly and possibly time consuming. Another disadvantage could be the risk that a new accounting system brings along in terms of possibilities for tax avoidance or fraud, that authorities composing the standard might have overlooked, the possibility of this happening is not unimaginable especially when the global standard will consist of a mixture of rules from around the globe, conciddering the global nature of the IAS and you can figure out that all companies worldwide will be performing the same tricks which can result in a small (worldwide) financial disaster for tax authorities. This scenario however, can be avoided by taking care when constructing the IAS. Difficulties in implementing one accounting standard A challenge within the international harmonisation process, which the IASB has to overcome, are the differences between nations. These alteration in Accounting Practices are results of specific environmental factors, which have shaped them. Therefore, one of the first problems with standardisation I conclude is that the result of the harmonisation process could neither be a copy of the Anglo-American Model nor one of the Continental-European Model. The Anglo- American Model is too difficult to implement for most economies of the world at least in the short run. For
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