Advantages And Disadvantages Of International Accounting

Table of Contents

Introduction 4
Main Advantages and disadvantages of harmonisation International Accounting 5
Issues that may arise in relation to the provision of relevant and reliable information in financial statements 6
The qualitative characteristics of financial statements as identified in the Framework 7
Conclusion 8
References 9

Introduction

In this essay we are going to discuss the main advantages and disadvantages of harmonisation of international Accounting. The history of accounting started when the first accounting records were found 600 years ago. In the early 14 th century in Italy the system of bookkeeping was introduced and in short time the trade increased around the world and people from all regions started to do bookkeeping, after that joint stocks and mechanisms were founded to do International level trading. 1
Harmonisation of International accounting was created due to growth of international trade and capital flows. 2

Main Advantages and disadvantages of International Accounting

Let us talk about the main advantages of International Accounting Standards, the differences in political and economy, lack of strong professional accountancy bodies in some countries and also size of the present differences between the accounting practices of different countries.3
Internally multinational companies would make savings if all of their subsidiaries could use the same accounting system. Similar international reporting system gives the chance of less confusion, mistakes and better comparison between the parts of the company. It allows simple communication and transfers of financial assets. Other cost saving can be achieved through preparation of consolidated financial statements, this process would be easier for companies, because when the parts of the company are consolidated to one, there are no longer costly changes from several different accounting systems of each subsidiary. Other major advantage is growing numbers of multinational corporations, investors and analysts benefit from enhanced comparability of financial statements. They have easy interpretation and same technique, methods and language. 3
Although there are many advantage of harmonisation, there are also many disadvantages. One possible disadvantages of harmonisation can be seen through cultural influences. Some countries may view national accounting standards as a submission to the will of the countries.3
A major condemnation of harmonisation comes from underdeveloped countries who view harmonisation as an obligation. Other disadvantage is that policies can be implemented without consent of all the nations involved in an international accounting system.3
Issues that may arise in relation to the provision of relevant and reliable information in financial statements

Let us talk about to some issues that may arise in relation to the provision of relevant and reliable information financial statement.
The relevance and reliability are both important to obtain better quality of the financial information. Relevance and reliability are connected to each other in such a way that effect on one will hurt other and vice versa. Second issue with the provision of relevant and reliable is that the two qualities dependent of each other that is perceived relevance buy users is dependent on the perceived level of reliability. Other problem is that the level of reliability cannot affect such a way that it will remain or increase with the introduction of fair value measurement. The move to relevance is decrease to reliability.3
The conflict between timeliness and reliability occurs when producing reliable and accurate information it may take more time. The delay in provision of accounting information may make it less relevant do

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