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

Should Accounting Rules be Global - Essay ExampleThe multinational companies have been required following the systems and account statement standards followed in the assorted economies of their operation for the set and reporting of financial statements. The companies have also faced difficulties in explaining their financial position to the investors due to the difference in the account statement systems in different countries that reflects various financial situations of the business (Basu, 1997). A globalized accounting system requires the establishment of harmonious accounting standards such as International Financial Reporting Standards (IFRS) that can assistance the users of accounting information to apply the same rule during preparation and interpretation of the accounting information.Various companies have gradually engaged in the establishment of accounting standards that can be applied in more than one country (Heidhues & Patel, 2012, p. 39). Some of the factors that influence the accounting system of the economy could be broadly categorized under the countrys historical origin, socio-economic demands, culture, institutional environment and many non-accounting factors such as values and beliefs (Gaffikin, 2007). These factors are different for every country. Also, the accounting systems of the countries diverge from one another. The recent cause of suggestion for establishment of uniform 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 postulate effectively and compare the performances of affiliate businesses across the globe using standard information.The variation of accounting standards has affected number of sectors of the economy that require harmonization of accounting standards to make them operate smoothly (Zimmerman & Werner, 2013, p. 117). The operation of capital markets is affected by accounting princ iples since