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Advantages and barriers of harmonizing International Financial Reporting Standards throughout the world

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Advantages and barriers of harmonizing International Financial Reporting Standards throughout the world
The development in international trade and capital flows that has occurred over the previous two decades has increased the desire to harmonise accounting standards across the globe. The appeal of international accounting harmonization has been extensively discussed. Numerous academics Ali, J M (2005), Adhikari and Tondkar (1992), Saudagaran (1997) argue that adopting International Financial Reporing Standards (IFRS) would bring great benefits to society, such as comparability of statements between countries, progression and development of capital markets and communication and relationships between multinational companies. It has also been debated by some Blake (199O), Nair and Frank (1981), Nobes and Parker (2004 ), Arpan and Radebaugh (1985), Deegan (2005) that with the rewards gained from harmonization come some barriers; economic consequences, nationalism and the lack of professional bodies.

One of the most valuable features that would come from harmonization would be the comparability of international financial information. Currently there is great misunderstandings about the foreign financial statements, improving comparability would remove this issue and it would also eliminate one of the most significant barriers to the flow of international investment. Global harmonization would save time and money that is presently being spent on uniting differing financial information when more than one set of reports is required to comply with the different national laws or practice Blake (1990). It will also improve the tendency for accounting standards throughout the world to be raised to the highest possible level and to be consistent with local economic, legal and social conditions. Having one international accounting language is beneficial for the worldwide comparison of statements and understandability.

Unifying accounting standards would also help the development and expansion of capital markets. Ali, J M (2005). In the last two decades the growth in
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