Should Accounting Rules be Global Essay Example | Topics and Well Written Essays - 1000 words

Should Accounting Rules be Global - Essay casingThe multinational companies have been required following the systems and business relationship standards followed in the various economies of their operation for the preparation and insurance coverage of financial statements. The companies have also faced difficulties in explaining their financial position to the investors due to the difference in the accounting systems in different countries that reflects various financial situations of the business (Basu, 1997). A globalized accounting system requires the physical composition of harmonious accounting standards such as International Financial Reporting Standards (IFRS) that can help the users of accounting information to apply the same rule during preparation and interpretation of the accounting information.Various companies have piecemeal engaged in the establishment of accounting standards that can be applied in more than wholeness country (Heidhues & Patel, 2012, p. 39). Some of the factors that influence the accounting system of the economy could be broadly categorized down the stairs the countrys historical origin, socio-economic demands, culture, institutional environment and many non-accounting factors such as values and beliefs (Gaffikin, 2007). These factors ar different for every country. Also, the accounting systems of the countries vary from one another. The recent cause of suggestion for establishment of homogeneous accounting standards has been the expansion of businesses into the international economies (Gaffikin, 2007, p. 3). Having uniform global accounting standards will help businesses to compete efficaciously and compare the performances of affiliate businesses across the globe using standard information.The variation of accounting standards has bear upon material body of sectors of the economy that require harmonization of accounting standards to make them operate smoothly (Zimmerman & Werner, 2013, p. 117). The operation of capit al markets is affected by accounting principles since