Accounting Theory

Discussion: The Harmonization of Accounting standards remain a challenge. Will there be the harmonization needed? Do you see this issue being resolved soon? The harmonization of accounting standards still remains a challenge. It is the aspiration of the International Accounting Standards Board (IASB) to set up a distinct quality of global accounting standards. Harmonization is needed as it would facilitate financial accounts worldwide to be transparent and easily understood while reducing the cost of capital. Our global economy affects the entire business world is another reason for harmonization of accounting standards. Global Corporations have more than one headquarters over the world will benefit greatly from harmonization of accounting standards because it will eliminate the need to prepare multiple financial statements/reports and market share loss. Foreign investors will be more knowledgeable with respect to investment in shares worldwide because the financial statements are easily understood. The financial information of a company is a type of a language. For this language to be effective for credit and investment decisions, it should not only be comprehensible but also be comparable. There has been significant improvement in the last ten years as it relates to more than 100 countries moving from national accounting to international accounting standards. This is seen in the change that the new standards are no longer identified as International Accounting Standards but International Financial Reporting Standards or IFRS.The issue will not resolve immediately because change always take time to implement and be accepted by the users. Support will be needed to assist those countries with the execution of the new IFRS especially first time users. References: Feedback Statement Agenda Consultation 2011. Retrieved February 8, 2013 from www.ifrs.org/CurrentProjects/IASB-Projects/IASB-agenda-consultation/Documents/Feedback-Statement-Agenda-ConsultationDec-2012.pdf Harmonization of International Accounting Standards. Retrieved February 8, 2013 from http://voices.yahoo.com/harmonization-international-accounting-standards-150004.html Schroeder, R., Clark, M., Cathey, J., Financial Accounting Theory and Cases: Text and Cases. 9th Edition. Wiley& Sons Inc (2009).