Since a worldwide market continues to be widespread in the modern society, there’s an increasing requirement to establish universal standards for many companies and businesses. This holds true within the discipline of bookkeeping. 1 alternative is to integrate harmonization. This report’s purpose is going to be also to emphasize the benefits and pitfalls it is going to have about the sphere and to clarify the idea of harmonization.

According to Samir Mogul at Harmonization of Accounting Standards, harmonization has been “the constant process of making certain that the Generally Accepted Accounting Principles (GAAP) have been devised, coordinated, and upgraded to global best practices” (Mogul, 684). In present times, harmonization is associated with the convergence of both IFRS and GAAP, that’s that the International Financial Reporting Standards. GAAP is usually considered to be whereas IFRS is regarded as much more principles-based. A few of the differences between both of these criteria include variances from stock coverage, the earnings statement, and earnings per share dimensions. The United States continues to run under GAAP as international economies have adopted IFRS because of its energetic way of globalization. As pressures of globalization continue to grow, the USA transitioning to IFRS’s idea has become imminent.

Generic accounting criteria will offer many advantages to the worldwide market. As emphasized Nicolas Pologeorgis’ The effect of Mixing the U.S. GAAP and IFRS, the objective of this Securities and Exchange Commission will be “to constantly pursue the achievement of honest liquid and efficient capital markets, and thereby providing investors with information that’s accurate, timely, and comparable, and reliable” (Pologeorgis). It is going to offer consistency. This will enable companies to be analyzed by accountants whatever the nation where they function throughout the planet. Since all businesses will adhere to the identical set of criteria investors will have the ability to compare financial claims of businesses. This will result in a rise in economic development and investments.

Though there are various benefits of this harmonization of accounting standards, there are a couple of drawbacks linked to the procedure also. These include the amount of time it takes to implement the expenses and the standards concerning the procedure. Investors, management workers, and accountants might need to educate themselves to the accounting info, which is expensive to businesses. Since the controls in place will get obsolete businesses will need to design internal controls. Another obstacle of accounting standards is going to be the unwillingness of states because most of these have moral, economic, and political systems to devote to a code. Another negative impact highlighted by Grant Houston at The Benefits of Harmonizing Accounting Standards will be that the effect it’s going to have on small companies in america (Houston). The compliance costs related to the transition will inhibit growth and the growth of smallish companies.

(**)Harmonization is a theory that will last to be shared with the present rise of the worldwide market. The USA transitioning to IFRS’s notion is a very common subject of discussion in the accounting industry. Whether the advantages of harmonization outweigh the costs is going to be the element in the choice.

()References:-LRB-**)(s)Houston, Grant. “The Benefits of Harmonizing Accounting Standards.” Small Business. Chron, Sept. 2011. Web. 17 Nov. 2013.)

()Mogul, Samir S. “Harmonization of Accounting Standards.” Editorial. Chartered Accountant Jan. 2003: 681+.) Web. 17 Nov. 2013.)

(s)Pologeorgis, Nicolas. “The Effect of Mixing The U.S. GAAP Along With IFRS.” Investopedia. N.p., 21 Jan. 2013.) Web. 17 Nov. 2013.)