Adapting International Accounting Standards Essay -- Accounting Inter

Companies in each country have to adapt and regulate their financial statements to certain requirements. They base and format their accounting standards on their national General Accepted Accounting Principles (GAAP) set by security regulators. However, in this modern globalized era, owing to too many financial differences between nations, it is increasingly difficult for entities to compare their financial records and identify trends in their financial position and performance with their competitors. As an answer to such financial chaos, harmonisation consists of formulating one universal GAAP; accountants worldwide would subsequently be able to use one single standardized practice, which would, according to Weber (1992), improve financial market information, government accountability, facilitate international transactions and minimise exchange costs. However, harmonising standards remains a disputable answer in accounting. This paper will attempt to shed some light on the current debate about the pros and cons of adopting a universal set of accounting standards. International accounting standards are discussed, set and published by the International Accounting Standards Board (IASB) which was formed in 2001. The International Accounting Standards Committee (IASC) was the predecessor of the IASB; its Foundation is to harmonise all worldwide GAAPs into one single set of accounting standards. According to Mogul (2003), harmonisation is defined as the constant process of ensuring that the GAAP of each country are formulated, aligned and updated to international best practices (GAAPs in other countries) with suitable modifications and fine tuning, considering each domestic condition. Harmonisation is thus wished by any financ... ... issue 7, pp. 975-992 ScienceDirect [Online]. Available at: http://www.sciencedirect.com/science (Accessed: 03 November 2010) Mogul, S. (2003) Harmonization of Accounting Standards. Available at: http://www.icai.org/resource_file/11430p681-684.pdf (Accessed: 3 November 2010) Blake, J. and Hossain, M. (1996) Readings in International Accounting. London: Routledge. Weber, C.M. (1992) ‘Harmonization of international accounting standards’, The National Public Accountant [Online]. Available at: http://www.allbusiness.com/accounting/methods-standards/339832-1.html (Accessed: 3 November 2010) Wittington, G. (2008) ‘Harmonisation or discord? The critical role of the IASB conceptual framework review’, Journal of Accounting and Public Policy, vol. 27, issue 6, pp. 495-502 ScienceDirect [Online]. Available at: http://www.sciencedirect.com/science (Accessed: 03 November 2010)