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Please check the attachment the required is second point which is
- A critical evaluation, using relevant academic literature, of the motives behind the harmonising of accounting practices by these organisations. 500 words thats only whats required. Please check attachment
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Harmonization of Accounting Practices
With a view of increasing accounting practices compatibility, there was a need for setting
bodies that would lay down bounds based on their extent of variation. The UK with a view of
practicing harmonization in their accounting practices, the EU and the IASB were given the
mandate of this task. The EU which is an economic and political union is inclusive of 28 states
located in Europe. Apart from regulating accounting practice, this body was tasked with ensuring
free movement of goods, capital, services and people within the internal market. It also enacted
legislation to the home affairs and justice systems to maintain trade policies.
On the other hand, the IASB which is an acronym for the International Accounting
Standards Board which was initially referred to as the International Accounting Standards
Committed was formed in 1973 (Mechelli). This was in a bid of developing International
Accounting Standards while promoting the application and the use of these standards. In light of
the above opening statements, this paper seeks to discuss the motive of these bodies to
harmonization of accounting practices. Conversely, the paper will tackle the obstacles in the
process of harmonization and efforts by other bodies such as IOSCO and IFAC.
The formulation of IASC before changing to IASB in 2001 was to combat the setback of
differing systems of accounting characteristic of the global system. This body carried out this
task by reducing standard options subsequently increasing comparability. Hence, companies
were supposed to enlist themselves with a member of the IOSCO (Camfferman and Zeff). This
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was done for recognizing the quality standards of IASC as body mandated with the task of
harmonization of accounting practices and for the regulation of the stock exchange by IOSCO
members (Beke). Conversely, the EU on its part in cooperation with the IASB; it required for all
the companies listed with the EU to comply with the standards of the IASB as promulgated in
the year 2005. This had the benefit of allowing investors to compare and understand accounts
from the member states of the EU.
As well it reduces capital costs for these companies while increasing marketing efficiency
subsequently boosting gro...