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Harmonization of International Accounting Standards: Advantages & Disadvantages, Obstacles & Solutions

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Harmonization of International Accounting Standards: Advantages & Disadvantages, Obstacles & Solutions
Harmonization of International Accounting Standards: Advantages & Disadvantages, Obstacles & Solutions As the trend for globalization in business becomes increasingly important for economic success, many issues arise through international business practices for corporations, governments, and investors. Due to the many conflicting codes and practices that exist between various national financial accounting standards throughout the world, international business becomes harder to analyze as information is not easily comparable between competitive industries. (Diaconu 2007) Because there is no standard international code for financial reporting around the world, many multi-national corporations are forced to reconcile their financial information to conform to multiple financial reporting standards. This process of reconciling financial information for conformity with different accounting systems can be expensive, and also make information misleading. As a result of the massive increase in international business and the difficulty of reporting accurate universal financial information, initiative has been taken to create a harmonization of accounting standards between nations. Harmonization of accounting standards between nations is a very important current issue which has many possible benefits or consequences, as well as many obstacles to overcome for success. This paper will examine potential advantages and disadvantages of a harmonized international accounting standard; discuss various obstacles associated with the creation and implementation of these standards, and provide possible solutions to overcome these obstacles. There are many potential advantages associated with harmonization of accounting standards. The world economy could benefit through increasingly educated investment decisions which would lead to overall global economic growth. Accounting information can be interpreted by experts to reduce the risk of


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