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Harmonization for Accounting

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International Harmonization for Accounting
Harmonization is defined as the modification of changes and inconsistencies among varied measurements, procedures, or systems to make them equally well-matched. Its purpose is to make sure that GAAP (Generally Accepted Accounting Principles) are prepared and fully up to date with the international policy through subtle revisions depending on the domestic conditions (Mogul, 2003). All of this is put into place to increase the similarities with the accounting principles by setting restrictions on substitute approaches to transactions; the International Accounting Standards Committee helps set these restrictions and is the main leading force in the development of the standard (McGregor, Pactor, Saudagardan & Zeff, 2000). The IASC has been an independent private sector since 1973. Due to globalization of businesses and oversees investment we have a need for harmonization. It comes from the discrepancies that are present between the accounting systems, and so the objective is to find causes that could explain the difference (Mechelli, 2009). Along with the need there are many benefits associated with harmonization.
Creating harmonization enhances and ensures that the information in financial reports is of high quality and are similar to one another (McGregor, Pactor, Saudagardan & Zeff, 2000). Corporations that are world-wide no longer have to worry about preparing different reports in which they operate, and their credibility is improving as a result. Harmonization puts all the countries on an equal “playing field where no country is advantaged or disadvantaged by GAAP” (Mogul, 2003). This is extremely important because in certain situations it can be critical to the development of the overall economic and financial aspects of the country. Also, it makes it more meaningful when we compare the performance of a

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