This website uses cookies to ensure you have the best experience. Learn more

Harmonisation Of Accounting Standards. Essay

2416 words - 10 pages

Harmonisation of accounting standardsInternational accounting harmonisation can be defined as "the process of bringinginternational Accounting Standards into some sort of agreement so that the financialstatements from different countries are prepared according to a common set of principles ofmeasurement and disclosure".Harmonisation means that deviating rules, which do not exclude themselves, can continue toexist next to each other. That means harmonisation does not focus on the elimination ofdifferences 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 internationalcomparability of financial statements. Harmonisation has been broken down into two aspects: material and formal harmonisation* material harmonisationMaterial harmonisation refers to research from a practical point of view. That means thatthe harmonisation of Accounting Practice applied by different enterprises, is regarded. Itis about the consistency in actual application.* formal harmonisationHarmonisation in terms of formal harmonisation is researched from a theoretical point ofview, which means that the similarities and diversities between rules and regulations ofdifferent countries, clusters or groups are regardedAdvantages and disadvantages of the IASCompanies prepare financial statements. Therefore the following advantages can be seen fromthe standpoint of preparers of financial reportsInternally multinational companies would make savings if all their subsidiaries could use thesame Accounting System. A similar internal reporting system gives the chance of bettercomparisons, less confusion and mistakes between the parts of the company. It allowsuncomplicated communication and transfers of finance personnel. One set of AccountingStandards could be used in various jurisdictions and capital markets. Further cost savings canbe realised, because the preparation of consolidated financial statements will be easier forcompanies. Because there are no longer costly changes from several different AccountingSystems of each subsidiary necessary, when the parts of the company are consolidated to one.With one set of Accounting Standards, the credibility of the externally reporting couldbe raised. No longer different performance figures are shown for the same company indifferent countries.Furthermore, international companies can realise significant cost savings if they do not haveto change their financial statements to conform to each country's rules, when listing onsecurity exchanges. In other words the access to main financial markets will become easier forglobal acting companies and by this it will be possible to acquire capital simpler for them.The following example will make this more clear. Imagine a company, which has a subsidiaryin Cuba, the parent company is located in Germany and the shares are listed on the NYSE.This company would have to...

Find Another Essay On Harmonisation of accounting standards.

3. Over the years document the prescribed standards for Accounting for Goodwill and the theories that underlie each of the prescribed treatment

843 words - 4 pages The issue of accounting treatment for goodwill was beginning during the year 1880-1929. The accounting of goodwill was emerged when the form of business was changed from sole proprietorship to corporations as according to Hughes, The development of goodwill was paralleled with the development of business enterprise. (As cited by Garcia, 2006) During that period, the useful life of goodwill has become a major accounting issue. Dicksee claims that

Adapting International Accounting Standards Essay

1430 words - 6 pages harmonise all worldwide GAAPs into one single set of accounting standards. According to Mogul (2003), harmonisation is defined as the constant process of ensuring that the GAAP of each country are formulated, aligned and updated to international best practices (GAAPs in other countries) with suitable modifications and fine tuning, considering each domestic condition. Harmonisation is thus wished by any financier. By harmonising international

Need for Harmonization of International accounting standard

1995 words - 8 pages executives to manage critical relationships with customers, suppliers and others. The group that would benefit the most out of the harmonisation of accounting standard would be the Multi-national companies (Lawerence 1996) as the communication of financial information within the groups would become easier. With the harmonization of reporting standards it would be easier for MNC's to fulfil the disclosure requirement for stock exchanges around the

The Need For Harmonising Accounting Standards

1804 words - 7 pages 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 & Parker 2004). There is a need for harmonisation of accounting standards in order to help the foreign investor to understand the financial statements of the foreign companies whose

A Report on The International Financial Accounting Standards

1112 words - 5 pages . History: Initial Stage: The international convergence of accounting standards has come along way since its development in the late 1950s and early 1960s. Efforts to bring together the U.S. and the international accounting rules transpired emerging from post World War II’s obscurities. These initial efforts were based on harmonisation. Harmonisation focused on reducing differences between accounting standards used in major capital markets around

What effects are the new accounting standards to be introduced going to have on business's within the UK and US?

1686 words - 7 pages financial managers facing several major issues. One major issue that continues to re-emerge time and time again is the diversity of financial reporting standards, between trading nations.As the principle objective of financial accounting being to provide all the information required in making sound economic decisions, companies are required to produce the following financial statements:1.Trading profit and Loss Accounts2.Balance sheets3.Cash flow

Trilogy Standards

2496 words - 10 pages The Trilogy StandardsAbstractThe changes to the trilogy standards which comprise of AASB 1018 'Statement of Financial Performance", AASB 1034, "Financial Report Presentations and Disclosures" and AASB 1040 "Statement of Financial Position" created confusion within the accounting profession and business community. The changes were designed for the purposes of international harmonisation and for a paradigm of change away from the profit and loss

Comparisons of usa, uk, and china accounting systems

3599 words - 14 pages individual businesses. This is not the case no more as a more developed and regulated accountancy profession are now receiving influence from accounting standards, governmental pressures not to mention harmonisation from fellow European countries.In contrast the US system is a bit more complex than that of the UK. To understand accounting standard setting in the US, one must start with the SEC (Securities and Exchange Commission) which is a regulatory

Islamic Industry Continues to Grow

819 words - 4 pages The Islamic finance industry continues to grow following continued internationalisation efforts. Last year’s growth was an impressive 16.5%, accounting for 25.7% of total assets in the banking system. The foreign currency business also grew with assets amounting to RM 18.1 billion in 2013. Meanwhile in the takaful sector, total assets of takaful funds grew by 10% to RM20.9 billion, while total takaful contributions accounted for 14% of total

UK Financial Regulatory Framework

2537 words - 10 pages directive regarding The harmonisation of the accounting regulation in EU. • Mandatory regulation: These include Financial Reporting Standards (FRSs) which are issued by the UK Accounting Standards Board (ASB) and Statements of Standard Accounting Practice (SSAPs) which have been adopted by the ASB. IFRSs and SSAPs will apply to the majority of individual company financial statements in the UK. • The Stock Exchange Listing Rules: are applicable

accounting ethics

1194 words - 5 pages be provided to accounting ethics educators. In the section three, different teaching methodologies of accounting ethics will be stated. Ignatian Pedagogical Paradigm (IPP), case, experiential methods, reflective learning method, and other methods are compared, and their limits and benefits are included in the section three. Also, some research and study suggestions related to these teaching methodologies will be provided to accounting ethics

Similar Essays

Internationalization Of Accounting Standards For Consolidation

2183 words - 9 pages A very good, detailed essay about International Accounting Stds. My instructor said it was the best paper that yearInternationalization of Accounting Standards for ConsolidationJapan: A Case StudyThe purpose of this paper will be to examine problems with internationalization of accounting standards for consolidations on methods from an international perspective - specifically, in the US and Japan. This is an especially timely topic as

The Advantages And Disadvantages Of New Accounting Standards Ifrs

968 words - 4 pages the old accounting standard, which should make comparing results on a like-for-like basis relatively straightforward. The purpose of this essay is going to give a general idea about advantages and disadvantage of IFRS, which has been widespread debate in the business community.Main bodyThe aim of the international harmonisation process of Accounting Standards is to reduce or overcome differences worldwide (Deegan 2005). In order to reach a better

Discussion Into The Impact Of Adoption Of International Accounting Standards To The Uk

1530 words - 6 pages 1981 (taken from Comparative International Accounting 6th Addition) looked at the degree of harmonisation over the period 1973 to 1979 and concluded 'the period of IASC's existence has coincided with a growing harmonisation of accounting standards', admittedly this was an earlier research.However preparation to adopt IAS is now underway in the EU at least. Sir David Tweedie, chairman of the IASB, recommends preparing for the adoption of IAS now, several companies have to change their systems, as well as prepare figures to show relationships between previous financial reports.

How International Financial Reporting Standards Affect The Quality Of Canadian Accounting Information

1846 words - 7 pages How would International Financial Reporting Standards affect the quality of Canadian accounting information? INTRODUCTION Globalization has a great impact on today’s economy. The differences of accounting regulations and practices in various countries have become a noteworthy obstacle to globalization and economic development. International Financial Reporting Standards (IFRS) mitigates global business barriers. In order to adapt to the