Success of Harmonization of International Accounting Standard
The accounting standard’s harmonization of is highly demanded and disputed issue among the accounting professionals all over the world. The rapid increase of the total quantity of the international trade operations alongside with the rapid internationalization of business entities, development of the innovative communicative technologies and competitive forces may be characterized as the factors, which make their impact on the financial environment.The major focus of this paper is put on the harmonization issue, its challenges and current status, with special reference to German perspective Success of Harmonization of International Accounting Standard
Reasons for harmonization
The harmonization of the accounting standards may be referred as the highly demanded and disputed issue among the accounting professionals all over the world. It is possible to define the accounting standards as the best accounting practices’ authoritative statements, which are developed by recognized expert accountancy bodies, which relate to the different aspects of treatments, measurements and disclosures of accounting events and transactions, as related to the Generally Accepted Accounting Principles (GAAP) codification. Such norms are referred to be the guidelines for the accounting practices and policies. These norms set the way the codes, as integral parts of the financial statements, should be managed within the accounts and furthermore, represented in the annual accounts. In fact, the core purpose of designing such statements as well as their prescription is improvement of financial reporting quality and its benchmarking. These norms ensure the uniformity in financial reporting as well as the comparability and consistency of the information, which is published by the enterprises. In such manner, the option of representing the useful information to the set of various users emerges: creditors, suppliers, shareholders, lenders, investors, researchers, management, regulatory bodies, competitors, and society at large (Doupnik, 1987).
The single entity for the global community is created by the process of harmonization. There is no essence of the stockholding diversity in the case when there are an option of generation the financial statements of general purpose in real sense by the accounting system. That is why, alongside with the process of globalization, investors’ awareness in capital markets has significantly increased as well as the size of investors is multiplying. Significant investments are made by the foreign institution investors (FIIs) in the global scales. That is why, the accounting standards’ harmonization has been strongly advocated all over the world since it is critical for prompting the process of economic decision-making. The status ‘the language of the business’ has been already bagged by the accounting and thus, it needs the reporting of the affairs in such manner, which is commonly-understandable and clear. At the World Bank Conference, which has taken its place in 1999, it was stated that the power of taking a control over the language of business is critically essential in the current business realities. That is why, there is a need for the High-quality standards for the global accounting – in order to improve the investors’ …