Harmoisation of accounting practices

Let us make an in-depth study of the meaning, need and major forces of harmonisation of accounting. Harmonisation is a process of increasing the compatibility of accounting practices by fixing the limits to their degree of variation. Harmonisation carries a wider meaning than standardization although it is sometimes being used inter changeably. In a simplest way harmonisation means not only bringing out uniformity by reducing alternatives and differences in procedures by setting specific bounds, but embraces a blending and combining the elements of accounting practices of various countries into an orderly structure.

Harmoisation of accounting practices

The international business community recognized the need for uniform accounting standards. This has been necessitated by of the spectacular growth in the number and size of multinational companies, foreign investments and cross-border listings on the stock exchanges.

Comparability To improve the comparability against domestic and international peers, harmonization of financial statements is advocated. Harmonization strives to enhance comparability between financial statements by setting restrictions on the alternative accounting treatments allowed for similar transactions.

The comparability of financial statements becomes doubtful if similar transactions are accounted for differently in different countries.

Investors and analysts benefit from enhanced comparability of financial statements. Reduced Reporting Costs Financial reporting is a costly affair. Harmonized financial statements benefits multinational corporations because they can prepare one report rather than one for each country in which they operate.

In addition, it enables a systematic review and evaluation of the performance of foreign subsidiaries and associates. Video of the Day Brought to you by Techwalla Brought to you by Techwalla Level Playing Field Financial statements prepared on basis of the same accounting principles means that a level playing field is set where no country is privileged or underprivileged by its generally accepted accounting principles.

Harmonized financial reporting standards that cut across national borders are not simply ideal for a better global market; they are elementary to its existence.

Harmoisation of accounting practices

In addition, contradictions and inconsistencies in basic concepts are reduced. This gives the users of the financial statements confidence that the reports present true and fair view of the performance and position of the company.Common accounting practices will enable the MNC to provide suitable information for internal performance appraisal, planning, control and to communicate financial information within the group.

harmoisation of accounting practices. Topics: European Union, 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.

Coherence & Effectiveness

In July, in the EU, the European government passed a law which required all. international harmonization Definition The process of standardizing laws, regulations and practices to facilitate the expansion, fairness and efficiencies of competing in a globalized economy as in integrated financial markets, international accounting standards, harmonized trading practices, and the sharing of technology for information dissemination.

Evaluate the role of IASB in harmonisation of accounting practices 2. Discuss the progress of global convergence to IFRS 3. Discuss the Work Plan of IASB and its Accounting Standards 4.

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Explain the changes of accounting standards in Malaysia 5. Evaluate the benefits and challenges of changes in Malaysian Accounting Standards 6.

accounting practices observed in the first plan and on innovations brought by the current system. The second point is built around the weaknesses of the OHADA accounting system and the third discusses the challenges accounting practices face in the real world.

Harmonization of International Accounting Standards Introduction As there has been a tremendous growth in the market place with the existing accounting practices.

Origins of International Accounting Harmonization - Oxford Scholarship