Harmonization of international accounting standards

We now have a global economy and it has affected the entire business world. For instance, today's global corporation may have more than one headquarters, and its production and distribution facilities are probably scattered throughout the world. Commodity prices, interest rates and currency exchange values have become internationally linked -- with the result that governments around the world are increasingly supporting harmonization of accounting practices and national policies

A international accounting standards are a necessary part of the rapidly globalization economy. harmonization of accounting policy would help provide a "level playing field" Regulators and auditors will be receiving the same information, facilitating the evaluation process. In the 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. Investors and managers will be able to make more valuable decisions. World resources will be better managed and allocated. It is possible, due to their necessity, to have international accounting standards (IAS) harmonization .

The "harmonization" of accounting standards will help the world economy in the following ways:

-facilitating international transactions- minimizing exchange costs by providing increasingly "perfect" information-standardizing information to world-wide economic policy-makers -improving financial markets information -improving government accountability.

Obstacles in Harmonization of Accounting Standards

-The size of the present differences between the accounting practices of different countries

-lack of strong professional accountancy bodies in some countries

-differences in political and economic systems-Nationalism also posses a threat to harmonization

as countries are wary of ceding control of their accounting regulation to outsiders

There are considerable differences between the national accounting rules of individual countries, countries that are studying the difference between their national rules and the international standards

Even though the UK standards are relatively close to the international accounting standards ,identify an enormous number of differences

Criticism of Harmonization of Accounting Standards

*underdeveloped countries and developing countries see harmonization of international accounting standards as an imposition of standards by economically superior countries

*accounting is flexible in nature and can adopt to different number of situations but if accounting standards are harmonized it is believed that they won't be flexible enough and the standards set internationally cannot possibly cater for the wide range of national circumstances

*prove dangerous to the companies as the standards could cut profits and inject volatility into the balance sheets of the companies

*Most of the countries which trade with USA prepare their accounts according to US GAAP this in turn makes US GAAP accepted not only in USA but in other countries

المسؤلة المحلية المهنية الهيئاتبها المعمول المعاير اصدار عن

: االردن في

القانونين الحسابات مدققي جمعيةاالردنين

القانونين لمحاسبين العربي المجمع المالية االوراق هيئة المالية وزارة والتجارة الصناعة وزارة االردني المركزي البنك المالية الرقابة و المحاسبة ديوان

االردني

convergence, as opposed to harmonization