Provide a brief critical historical assessment of why and how Essay

Provide a brief critical historical assessment of why and how accounting harmonisation has been achieved internationally - Essay Example Investors can analyse statements from different countries and decide on the nature and magnitude of the similarities and differences (Nobes. 76). Harmonization of accounting standard provides a level playing field globally (Shil, Das and Pramanik, 2009: 195). This level requires standardized accounting structures to facilitate international transactions and cost minimization through foreign payments by providing usable information to the global society. Under the global business scenario, the community needs a common accounting procedure (Shil et al. 2009: 195). The international accounting standards committee that later adopted the word international accounting standard board (ISAB) was formed in 1973. The committee involved sixteen accounting bodies representing nine nations: Canada, Australia, Germany, United Kingdom, Japan, France, Netherlands, United States, and Mexico (Shil et al. 2009: 196). Currently, ISAB has a total of a hundred and fifty-three accounting bodies that represent a hundred and twelve countries. The process of harmonization has undergone a challenging path from inception. One of the critical breakthroughs was the adoption of international accounting standards by the international organization of securities commission on May 2000 for use in stock exchanges in member states (Shil et al. 2009: 196). The European Union used the fourth and seventh council directives to achieve harmonization. Company law harmonization of financial accounting procedures was based on the Article 54(3)(g) of the EC Treaty. The fourth ((78/660/EEC) Council directive of 25th July 1978 required all companies to prepare annual accounts (Com 95, 3). However, this directive did not aim to achieve complete standardization of accounting procedures. The seventh council directive (83/349/EEC) of 13 June 1983 was more interested in consolidated accounts. Companies were required to prepare accounts and parent companies