harmoisation of accounting practices
1.
1.1 EUROPEAN UNION (EU)
The European Union is an exclusive economic and political affiliation between twenty-eight countries that cover almost the whole of Europe. The European Union came into existence after the 2nd world war. Its first main aim was to implement economic cooperation between countries. This was done so that the countries can carry out business with one another and become more economically free and at the same time, this would also avoid any type of conflict between them. Thus the European Economic Community came into existence in 1958, and this helped in economic cooperation between 6 countries like Belgium, Germany, France, Italy, Luxembourg and Netherlands. Thus a vast potential market is created.
1.1.1
EUROPEAN UNION HISTORY
The main goal of the international convergence of accounting standard is to obtain a precise and good quality accounting standards to be used internationally and keep updating and improving it. In July, 2002 in the EU, the European government passed a law which required all companies listed on the stock exchange to prepare its financial statements keeping the IFRS from 2005. (Wolk, 2007)
The organizations with the European Union could make the use of IFRS optional for the entities that were not listed with unconsolidated holding entities statements.
1.1.2
EUROPEAN UNION OBJECTIVES
Creation of Internal Market
The European Union does not give the coordination of the accounting standards as the main goal. Instead, this aim was formed from the need to standardize company regulation requirements for the making of this internal market. This market allows the independent movement of materials, people, services and capital. The two main principles to construct this internal market include the freedom of formation and to grant services internationally.
The Accounting Derivatives
When trading internationally, organizations need to be similar and should be able to compare with one another; this doesn’t mean that the
1.1 EUROPEAN UNION (EU)
The European Union is an exclusive economic and political affiliation between twenty-eight countries that cover almost the whole of Europe. The European Union came into existence after the 2nd world war. Its first main aim was to implement economic cooperation between countries. This was done so that the countries can carry out business with one another and become more economically free and at the same time, this would also avoid any type of conflict between them. Thus the European Economic Community came into existence in 1958, and this helped in economic cooperation between 6 countries like Belgium, Germany, France, Italy, Luxembourg and Netherlands. Thus a vast potential market is created.
1.1.1
EUROPEAN UNION HISTORY
The main goal of the international convergence of accounting standard is to obtain a precise and good quality accounting standards to be used internationally and keep updating and improving it. In July, 2002 in the EU, the European government passed a law which required all companies listed on the stock exchange to prepare its financial statements keeping the IFRS from 2005. (Wolk, 2007)
The organizations with the European Union could make the use of IFRS optional for the entities that were not listed with unconsolidated holding entities statements.
1.1.2
EUROPEAN UNION OBJECTIVES
Creation of Internal Market
The European Union does not give the coordination of the accounting standards as the main goal. Instead, this aim was formed from the need to standardize company regulation requirements for the making of this internal market. This market allows the independent movement of materials, people, services and capital. The two main principles to construct this internal market include the freedom of formation and to grant services internationally.
The Accounting Derivatives
When trading internationally, organizations need to be similar and should be able to compare with one another; this doesn’t mean that the