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International harmonization of accounting standards

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Aleksandar Ivanov

on 6 April 2014

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Transcript of International harmonization of accounting standards

The pros and cons of international harmonization of accounting standards
International Accounting

IFT LEVEL 6

Presenter: 678853

Presentation overview:
1. Introduction
2. The international harmonization of accounting standards- the concepts behind
3. The need for accounting harmonization
4. The advantages of accounting harmonization
5. The drawbacks of accounting harmonization
6. The barriers for accounting harmonization
7. Concluding comments
1. Introduction
The today' s economy and the need for global harmonization of accounting standards
Hans Hoogervorst, the Chairman of the IASB:
"High quality financial information is the lifeblood of market-based economies. If the blood is of poor quality then the body shuts down and the patient dies. It is the same with financial reporting".
2. The international harmonization of accounting standards- the concepts behind
Definition :
International harmonization of accounting is the process of decreasing of the differences between the various accounting standards used internationally and increasing the comparability of accounting practices by setting bounds to their degree of variation (Samuels & Piper, 1985)
3. The international harmonization of accounting standards- the concepts behind
Ultimate goals:
• elimination of all possible misunderstandings and misinterpretations of the financial statements information
• significant support to the global investment capital flow
• accounting standards to be consistent with local economic, legal and social conditions


Slow, but steady pace of development: more than 100 countries and half of the Fortune Global 500 companies now report on IFRSs
4. The need for accounting harmonisation


"The capital no longer respects borders





Regulators
Preparers
Users
5. The advantages of accounting harmonisation
ation



The greatest benefit that the harmonisation would bring would be the consistency and comparability of the financial information across international markets.
Investors and analysts
Corporate bodies
Consulting firms
Governments and tax authorities

6. The drawbacks of accounting harmonisation
The most significant drawbacks include the length of time it will take to implement the new standards and the costs relating to the process
Corporate bodies
Countries
7. The barriers for accounting harmonization
The considerable differences that comes from the existing gap between the Anglo-Saxon and the continental accounting traditions

The differences in national regulations and the lack of supranational regulator

The countries’ nationalism and adherence to their national accounting standards

The various users of financial information have different needs
8. Concluding comments:
Poor indications for maintaining national accounting standards
Strong pros and cons

The debate is alive
Full transcript