5 obstacles to international harmonization of accounting standards

The following are obstacles for international harmonization of accounting standards;

  • A different legal system whereby some countries require certain accounting practices and policies and other countries do not.
  • Different purposes of financial statements, this is  IFRS aimed at investment decision-making whereas many countries use financial statements for tax purposes.
  • Language and cultural differences. Both of these can cause difficulties in the adoption of harmonized accounting standards.
  • Lack of strong accountancy bodies. Many accountancy bodies in various countries are not independent or strong enough to press for harmonization of accounting standards in their jurisdiction.
  • The different users of financial statements. Countries vary in the importance they place on user groups

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