The IASB created the International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) to harmonise accounting amongst all countries across the globe. The objective of harmonisation is to ensure that financial reporting around the globe is prepared using the same accounting standards or accounting rules.
Preparing accounts using the same accounting standards ensures that there is comparability of accounts prepared in different countries. Common accounting standards eliminate the different interpretations that are caused by disparities between accounting Wayne Lippman CPA standards in different jurisdictions.
The project of harmonisation of accounting standards faces the following barriers:
International issuesTax and legal systemsStage of development of accounting profession and economic developmentInternational Issues
Harmonisation is difficult because the worlds countries offer different social, political, and economic environments. Accounting standards from capitalist countries such as the US and the UK are more principle-based, and those Wayne Lippman from socialist and communist countries are rules-based and this makes the job of harmonising accounting standards more difficult.
The difficulty also emanates from the fact that many countries view their accounting standards as superior to accounting standards from other countries; therefore, they find it difficult to accept standards designed and developed by other countries or by a group of people from very few countries who may not share the same values as they do.
Issues such as language and cultural barriers play an important role in undermining the harmonisation project. In the US, for example, they use terms such as inventory, accounts receivable, and accounts payable when describing what other jurisdictions term stock, debtors, and creditors.
Tax and Legal Systems
Accounting is developed in response to the tax and legal systems in each jurisdiction. Financial reporting in some countries is dictated by the vagaries of the law; for example in some jurisdictions the accounts are prepared so that they meet certain tax rules; therefore, when accountants are preparing financial reports they will be following a certain rule book.
Accounting also developed as a consequence of the company laws in each jurisdiction. This means if the accounts are to pass the legal test they have to meet the minimum requirements set out in the law of each country. Harmonisation can therefore be fully achieved if company laws and other relevant country specific regulations are also harmonised.
Stages of Development of the Accounting Profession and of Economic Development
The accounting profession and economic development in each jurisdiction are not at the same stage or level. Some countries accounting professions are more mature than others and some countries are more prosperous and advanced economically than others. Harmonisation would mean coming up with common accounting standards that are applicable and relevant to all countries.
Accounting is more mature in the advanced or the developed countries such as the UK, France, and the US than it is in developing countries such as Jamaica, Zambia, or Fiji. Some of the economic events covered by certain accounting standards such as IAS 39 or IAS 32 apply mainly to countries with mature financial services industries. The migration to common accounting standards is costly for developing countries as they have to re-educate their accountants and re-align current accounting systems, and they may not have the resources to cope with the change.
http://suite101.com/barriers-to-the-harmonisation-of-accounting-standards-a339559
Preparing accounts using the same accounting standards ensures that there is comparability of accounts prepared in different countries. Common accounting standards eliminate the different interpretations that are caused by disparities between accounting Wayne Lippman CPA standards in different jurisdictions.
The project of harmonisation of accounting standards faces the following barriers:
International issuesTax and legal systemsStage of development of accounting profession and economic developmentInternational Issues
Harmonisation is difficult because the worlds countries offer different social, political, and economic environments. Accounting standards from capitalist countries such as the US and the UK are more principle-based, and those Wayne Lippman from socialist and communist countries are rules-based and this makes the job of harmonising accounting standards more difficult.
The difficulty also emanates from the fact that many countries view their accounting standards as superior to accounting standards from other countries; therefore, they find it difficult to accept standards designed and developed by other countries or by a group of people from very few countries who may not share the same values as they do.
Issues such as language and cultural barriers play an important role in undermining the harmonisation project. In the US, for example, they use terms such as inventory, accounts receivable, and accounts payable when describing what other jurisdictions term stock, debtors, and creditors.
Tax and Legal Systems
Accounting is developed in response to the tax and legal systems in each jurisdiction. Financial reporting in some countries is dictated by the vagaries of the law; for example in some jurisdictions the accounts are prepared so that they meet certain tax rules; therefore, when accountants are preparing financial reports they will be following a certain rule book.
Accounting also developed as a consequence of the company laws in each jurisdiction. This means if the accounts are to pass the legal test they have to meet the minimum requirements set out in the law of each country. Harmonisation can therefore be fully achieved if company laws and other relevant country specific regulations are also harmonised.
Stages of Development of the Accounting Profession and of Economic Development
The accounting profession and economic development in each jurisdiction are not at the same stage or level. Some countries accounting professions are more mature than others and some countries are more prosperous and advanced economically than others. Harmonisation would mean coming up with common accounting standards that are applicable and relevant to all countries.
Accounting is more mature in the advanced or the developed countries such as the UK, France, and the US than it is in developing countries such as Jamaica, Zambia, or Fiji. Some of the economic events covered by certain accounting standards such as IAS 39 or IAS 32 apply mainly to countries with mature financial services industries. The migration to common accounting standards is costly for developing countries as they have to re-educate their accountants and re-align current accounting systems, and they may not have the resources to cope with the change.
http://suite101.com/barriers-to-the-harmonisation-of-accounting-standards-a339559