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... , the basic cause of international differences in financial reporting practices is the differences of accounting development. They are, the nature of capital markets, the regulatory factors (the type of reporting regime, the business environment, the legal system & law enforcement ) and the economic and political factors (inflation, economic and political ties, the status of the accounting profession, and cultural influence). ... also mentioned that there are four factors can contribute to differences in accounting regulations and accounting reporting practices in different counties. ... 3)
Refer to International Financial Reporting Study Guide, if the countries or regions where the capital market is less developed and where corporations rely to a greater extent on debt to finance their operations, there is less impact on financial accounting and reporting regulations. ... 5)
In regulatory factors, in the type of reporting regime, various aspects of the broader regulatory environment will also impact upon the financial accounting and reporting practices adopted in different counties or regions. In countries like Germany and Japan, published financial reports are used as the basis for determining an entity’s taxation liability and this has implications for the financial accounting and reporting practices adopted. ... In common law countries such as the United States and Australia, accounting regulations are set on a piecemeal basis, typically by a private sector standard-setting body. ...
General political and economic factors will also have a profound impact on accounting and reporting practices. The accounting and reporting framework will reflect underlying political philosophies and objectives, such as weather a centrally planned and administered system is preferred to one that is based on private enterprise. ... It had the great impact on accounting financial reporting practices.
Part B
Refer to International Financial Reporting Study Guide, harmonization is the process aimed at reducing the diversity in financial reporting practices among different counties in order to enhance the comparability and decision-usefulness of the financial statements.
Approximate Word count = 1403
Approximate Pages = 5.6
(250 words per page double spaced)
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