international accounting

INTERNATIONAL ACCOUNTING HARMONIZATION

             A number of companies seeking to raise capital in markets outside the country of origin and the investors who seek to diversify their investments internationally face increasing problems as a result of national differences in terms of accounting, disclosure, and audit.
Sometimes people use the term harmonization and standardization as if both have the same meaning. However, contrary to the harmonization, standardization generally means the determination of a group of rigid rules and narrow and may even be the application of a single standard or rule in any situation. Standardization does not accommodate the differences between countries, and therefore more difficult to implementation internationally. Harmonization is much more flexible and open, do not use one size fits all approach, but to accommodate some of the differences and have experienced great progress internationally in recent years.

DIFFERENCES OF HARMONIZATION AND INTERNATIONAL ACCOUNTING STANDARD

Harmonization

·                     The process to improve the compatibility accounting practices to determine the limits of how much these practices may vary

·                     Not using a one size fits all

·                     But accommodates be some agreement and has experienced great progress internationally in recent years.

·                     Harmonization much more flexible and opened.

Standardization

·                     Determination of a group of rigid rules and narrow

·                     Application of a single standard or rule in any situation

·                     Standards do not accommodate the differences between countries.

·                     More difficult for the international implementation.

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international accounting

FINANCIAL REPORTING AND PRICE                            CHANGES

A. FINANCIAL STATEMENTS MAY HAVE THE POTENTIAL FOR MISLEADING PRICES DURING THE PERIOD OF CHANGE

            To understand the notion of price changes (changing prices), the following terms in use: A general price changes occur when the average price of all goods and services in an economy subject to change. Price increases are collectively known as inflation (inflation), while the price declines known as deflation (deflation).
            Specific price changes refers to changes in the price of goods or services which are caused by changes in demand and supply. A stable price level becomes a national priority for many countries around the world. Although the price changes occur throughout the world, the influence of business and financial reporting varies from one country to another.

҈ This distorts the measurement inaccuracies:
1. Financial projections based on historical time series of data
2. The budget is the basis of performance measurement
3. Performance data can not isolate the effect of inflation that can not be controlled

҈ Earnings are valued more in turn will lead to:
a) An increase in the proportion of tax
b) Request for more dividends of shareholders
c) Request for salaries and wages higher than the workers. Adverse action of the host country (such as the taxation of a huge advantage).

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