Harmonization of accounting practices did not emerge until the 1990s, when the board of accountants talked of a new methodology for foreign use. The primary initiative to introduce accounting standards harmonization was to strengthen the country-by – country market practices. Different countries can have different accounting standards and they need to meet the same accounting procedures in order to do business. The main foreign bodies include the United Nations, the Commission on International Accounting Standards, and EC. The debate between both parties was to implement one accounting method for multinational organizations and organizations in the United States. This proposal would address such problems resulting from the language barrier between countries. The EC had embraced the concept of harmonization for reporting accounts between the major international organizations. Nevertheless, there was no consensus about what would be harmonised with these foreign organizations. As a writer K. Van Hulie said, “There is no general consensus about what should be harmonized: annual reports, consolidated accounts, accounts of all bodies, accounts of all undertakings, accounts of listed undertakings, accounts of large undertakings, etc ..” Since companies perform their work differently from others, it is easy to see why there was no clear consensus. Some problems emerge from countries that do not want to disclose their financial details which causes problems. An agreement between the foreign organisations is key to how accounting is done worldwide. Harmonizing the accounting principles will have a huge effect on worldwide accounting. For more details click W M Wright & Co-Accountants.
Harmonizing accounting standards will require countries to exchange financial information which is consistent with each other. It would seem to make it simpler to pursue foreign companies, as each would pursue the same accounting practices. That theory appears to be a good one, but when it comes to financial details there might not be as many scandals. The explanation for that would be that if everybody were to observe the same procedures, they would know what they could and could not do. Now there’s the question over business size, because not all companies are the same size. There are far larger companies than others and that may influence whether harmonization is a good idea. As Aziz Jaafar notes, “Firm size is another significant determinant, and the evidence suggests more voluntary disclosures by larger companies” (Jaafar 159). The bigger companies are more often exposed to the public than smaller firms, which is a key reason for them to voluntarily disclose their reports. The scale of the companies is not only impactful, but also the countries themselves. Countries differ in size and some may provide better financial results than others because of that. This being said, it’s a possible reason not to want to obey the same accounting rules. There is also the number of firms in each region, to go along with the size of the countries. Financial information may vary from country to country because some countries do not want their information compared to larger countries. As nice as the harmonization of accounting principles sounded; after some time had passed a new concept called convergence accounting, there was turn over.