International Accounting Essay Example | Topics and Well Written Essays - 1500 words - 1

International Accounting - Essay Example As the first step, the fourth and seventh company law directives obliged the companies and group of companies to prepare accounts on a harmonised basis (Accounting Harmonisation). The main aim of the IASB/IASC was to overcome the international trade barriers arising out of different national laws. As Akyuz, Bulca, and Mustafa (n.d.) opine, the IASB/IASC thought that accounting harmonisation process would bring coordination in accounting procedures across the Europe and subsequently it would lead to the establishment of a single market. In order to harmonise the international accounting practices as a whole, the IASB/IASC firstly gave emphasis on the community law harmonisation. It is essential to note that a harmonisation programme at community had not been experimented until IASB/IASC did it. Forex News (2010) reflects that the accounting harmonisation process had been mainly practiced through policies which might drive member states to achieve the proposed objectives. Similarly, th e multinational companies were facing troublesome challenges to prepare coordinated financial statements at the end of the year since they might have branches across the globe and each branch would have distinct accounting practices in accordance with respective nation’s law. ... As a result of these differences in opening and closing of financial periods, IASB/IASC faced cumbersome difficulties in launching the proposed harmonization process simultaneously across the Europe. Heterogenic accounting philosophies prevailed in different countries were some other barriers which the IASB/IASC had to deal with. In the opinion of Fritz and Lammle (2003) some specific environmental factors play crucial role in moulding the accounting practices of each country and these factors vary from country to country. In most parts of Europe, professional accounting organisations did not have the authority to fix accounting standards; it was completely left to the choice of governmental authorities. Likewise, the vague interpretations and ineffective supervision of IAS/IFRS caused further problems toward the harmonisation process. They could not ensure the convergence of various interpretations of standards. It can be seen that height of IASB’s aims also adversely affecte d the effectiveness of IASC/IASB. It targeted the formulation of a single global market with common accounting practices in its premature stage and it seems to be highly challenging. Similarly, acceptance of IAS/IFRS at SEC was a major challenge to IASC/IASB. Moreover, national standard-setter, governments, and companies tried to influence the operations of IASB in order to defend their own interests. Support from IOSCO and IFAC International Organisation of Securities Commission (IOSCO) is the security regulators’ organisation that represents more than 80 countries and it works for enhancing cross border capital accumulation. Similarly, International Federation of Accountants (IFAC) aims at initiating of a world-wide