Harmonization of Accounting Standards through Internationalization

Abstract

The journey to have a common set of accounting standards started long before to give it a professional shape and essence. And accountants all over the world feel the necessity to shorten the gap among different streams of accounting practices through harmonization. Still, we have a couple of strong variants of accounting practices (say, for example, US GAAP, UK GAAP, IAS etc.) over the world existed and practiced simultaneously. These variants are working as threats towards harmonization of accounting practices. However, the profession has also witnessed some improvements in recent years in the process of global convergence putting some ray of hope. International and even local standard setting bodies have come up with projects of harmonization and in most of the cases became successful.The day is not far away when we will observe that accounting world is controlled and guided by a single set of standards giving it a status of legal discipline in true sense. The paper focuses on this harmonization issue, its current status, challenges with special reference to Indian perspective.

Adoption of International Financial Reporting Standards (IFRS) and Assets Quality in the Nigerian Banking Sector: The Fundamental Effect Approach

“…The principles provide uniform and consistent yardstick for assessing and comparing performances of the organizations. They are the authoritative statements of best accounting practices and are issued by recognized expert accountancy bodies providing a guide on how accounting information should be recorded, reported and interpreted (Shil, Das & Pramanik, 2009;Jamal, Shamsher, Taufiq & Zulkarnain, 2011). National standards differ from country to country because the standards reflect unique economic and socio-political realities of each nation and these realities normally differ among nations.…”

Ifrs Adoption and Performance of Quoted Consumer Goods Manufacturing Companies in Nigeria

“…Jeno (2010) asserts that financial accounting harmonization is a product of market (which the accounts serve) integration hence, global accounting standards would enable the world's stock markets to become more closely integrated into a single market and when such is the case, the transaction costs for investors and the cost of capital for firms in that market would be lower because, before the adoption of IFRS, differences in international reporting practice was a major barrier to efficient international investment, monitoring and contracting (Jeno 2010). In this vein, Shil, Das, & Pramanik (2009) argued that accounting standards harmonization will be of benefit to the world economy in the following ways: facilitation of international transactions and minimization of exchange costs by providing increasingly "perfect" information; standardization of information to the world-wide economic policy-makers; by improving information in the financial markets; and by improving government accountability.…”

“…The recent expansion of international capital markets and availability of instantaneous global communication have placed on accounting the onus to provide useful and comparable information across international borders [Rivera, (1989) in Shil, Das & Pramanik (2009)]. However, many companies face increasing problems as a result of national differences in accounting measurements, auditing, and disclosures resulting from seeking capital outside of their home markets and investors attempting to diversify their investment internationally; in response thus, harmonization efforts increased during the 1990s which is now one of the most important issues facing accounting standard setters, stock exchanges, securities market regulators, and those who prepare or use the financial statements (Lakmal 2014).…”

Harmonisation of National Regulations with International Standards Cash flows

“…Why is harmonization important? Shil et al (2009) say that "this "harmonization" of accounting standards will help the world economy in the following ways: by facilitating international transactions and minimizing exchange costs by providing increasingly "perfect" information; by standardizing information to world-wide economic policy-makers; by improving financial markets' information; and by improving government accountability". Wang's (2011) article investigates whether harmonization of accounting standards increases comparability between countries, using a difference-indifferences design for the introduction of International Financial Reporting Standards.…”