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Harmonization of International Accounting Standards

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Table of content
Part 1……………………………………...…………………….…………2-5 Advantages of harmonization…………………….…….2-3 Disadvantages of harmonization……….…………...…3-5
Part 2…………………………………………………...………...…………6-8 Importance………………...…………….………….….6-7 Challenges in reducing disclosures……………………7-8
Reference……………………………………...……………………………9-10

Coursework
Part 1: Harmonization of international accounting standards
Every organization has their own accounting systems and standards. If every organization is preparing its financial reports in their own way, it is difficult for the users of accounting to use the financial reports. (Kirk, & Miller, 1986) Harmonization of international accounting standards 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. There are many potential advantages and disadvantages/challenges associated with harmonization of accounting standards. (John, 2013)

Advantages 1) Reduced Reporting Costs
Multinationals operating in countries with different accounting standards would incur high costs of preparing financial reports in accordance with each country’s accounting principles, then repeating the whole process for consolidation purposes. Harmonized accounting standards 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. (Mark, 2013) 2) Improving Comparability
To achieve the comparability against domestic and international peers, harmonization of accounting standards is advocated. Harmonization strives to enhance comparability between financial…...

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