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In: Accounting

What arguments are there against the process of international harmonization of accounting?

What arguments are there against the process of international harmonization of accounting?

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Expert Solution

INTERNATIONAL ACCOUNTING HARMONIZATION


“Harmonization” is a process for improving the compatibility (suitability) accounting practices by setting limits on how large-prkatik practices may vary. Harmonization of standards will be free of conflicts of logic and can improve the comparability (comparability) of financial information from different countries. Efforts to harmonize accounting standards have been started long before the establishment of the International Accounting Standards Committee in 1973.

Criticism of the International Standards

Some penentusn says concerning that international accounting standards is a very simple solution for complex problems. Furthermore, it feared that the adoption of international standards will lead to “excessive standards”. Companies must respond to the pressure composition of the national, political, social, and economic and increasingly made the MAGs to meet additional international regulations are complicated and costly.

Internationalization of accounting standards is also drawn criticism. In early 1971 (before the establishment of IASC), some argue that the determination of international standards is a very simple solution for complex problems. Also stated that the accounting, the social sciences, has had a flexibility that is built up by itself in it and the ability to adjust to a very different situation is one of its most important values. At the international standards of doubt can be flexible to overcome differences in background, tradition, and national economic environment, some people argue that this will be a challenge that is politically unacceptable to national sovereignty.

Furthermore, it feared that the adoption of international standards will lead to “excessive standards”. Companies must respond to the pressure composition of the national, political, social, and economic and increasingly made the MAGs to meet additional international regulations are complicated and costly.


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