harmonization-of-the-international-acc-system

harmonization-of-the-international-acc-system -...

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Author: Lecturer Ph. Diaconu PAUL Academy of Economic Studies Bucharest Abstract: Globalization is one of the biggest social processes which the humanity has facing since ever. That’s why it’s impact in the global economy is huge. Facing a global challenge financial information system has called for consistent financial information produced by accounting. One of the main international accounting processes on the actual period is the harmonization of the national accounting systems. There are the two main systems which are disputing the first stage of being the benchmark: GAAP and IFRS. Each of them has his pluses and minuses on being the choused one. Due to this fact a convergence of the two, joining the advantages and disadvantages of the two should be the solution for an unique international accounting solution. Is this idea realizable, what steps has been made until now, what should be done in the future. These are the questions on which this paper is trying to answer. Keywords: globalization harmonization, convergence, international accounting standards. INTRODUCTION The business community has admitted that the accounting is “the language of business”. They are using the accounting to communicate the existence and the evolution of the financial situation and also of the performance for the economical entities. Financial information is a form of a language. And if the language of financial information is to be putted to use, so that investment and credit decisions can more readily be taken, it should not only be intelligible, it should also be comparable. Due to the fact that many companies follow the globalization process, so they go global the accounting needed to follow this process and to present financial situations using an unique accounting procedures which can be understand by the entire business community. Due to the fact that this process is following global trends, and the globalization is first of all a political process the starting point in creation of an unique accounting system needed to pass a difficult process where the main accounting systems will litigate to impose their accounting policies and practices. (Belkaoui 1994) These new environmental factors of the global economy, the international monetary system, the Multinational Corporation and foreign direct investment create an environment in which business transactions, their conduct, measurement and disclosure, takes new and distinctive form that call for a specific accounting sub discipline or the harmonization of accounting practices. Despite of the difficult process as Anderson said (1993) “ a set of international accounting standards will allowed new horizons of evolution due to the fact that comparative analysis of the rates of returns established based on the balance sheets and profit and loss account between the companies being in competition become relevant”. The comparison, as the basic form of economical judgment can be realized, only if the
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This note was uploaded on 06/14/2011 for the course ACCT 101 taught by Professor Ggfthyu during the Spring '11 term at University of Central Punjab.

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harmonization-of-the-international-acc-system -...

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