Essay On Harmonization

Harmonization of accounting standards has become very highly demanded issue of debate and discussion between professionals all over the world. Accounting standards are said to be standards of accounting polices and practices by way of guidelines as to how to deal with the financial statements. Such statements are designed to increase and benchmark the quality f financial reporting. “harmonization” objective can be said as having yo reduce differences to coming out with a standard or model for uniformity. The motives of EU and IASB, is being involved in the process of harminzation of different national accountins systems. Their aim is to develop a single set of hogh quality, understandle and enforceable global accounting standrds. (Elliott and Elliott, 2009). Although this is more standardizing than harmonizing as it’s less flexible. This “harmonization” will also help the world econocmy by: facilitating internanattional transactions and minimizing exchange costs by giving increseaingly perfect information, standardizing information to world-wide economic policy-makers, improving financial markets information and improving government accountability.
Harmonization of accounting policy will gibe us a “level playing field” globally. Accountants and or auditors will get the same information, simplifying the evaluation process. In this absence of free trade, international accounting standards will allow nations' tariffs, quotas and other trade restraint mechanisms to be more accurate and less risky for those engaged in trade. managers will be able to make more valuable decisions. The resources of the world will be managed and located much better.
With the increasing rate of international trade and internationalization of firms, th...

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Whittington (2005) said that motivation for formation of the IASC was due to the need of a common international language of accounting to serve capital markets.

He highlighted that a common set of accounting standards increased the comparability of companies in different countries and facilitated the easy consolidation of group of companies based in different countries. Although IASB sets standards after close scrutiny from different national standard setters, it is evident that it is involved more with convergence than harmonisation. This may in a way also support the sentiments expressed by UK finance directors during a survey that IFRSs undermined UK (and obviously of all other countries) reporting integrity, (Elliott and Elliott, 2009). Countries still need to maintain their national pride as they exhibit substantial economic and cultural differences.