In recent years due to globalization, the economies of the world are integrating which are creating more opportunities for the organization to grow internationally. It means that organization today are expanding all over the world so that they can generate more profit and can meet the needs of the huge amount of customers. Therefore the increase in trade activities is creating problems for the accountants around the world. In various countries, the accounting rules & regulations are different for example UK GAAP, US GAAP, and IFRS etc. The different accounting standards in different countries create a problem for the investors & traders and affect their financial decisions. That is why the accounting bodies are considering harmonization of accounting practices so that in every country accounting standards remain the same and traders who trade internationally won’t face any issue. However various accounting practices have become a hurdle in harmonization.

Critical Analysis to provide brief financial information to the stakeholders of the organization

         It is important for the accountants to prepare and record the financial statements according to the standards set by accounting bodies such as GAAP.  There are several important reasons for adopting the standards set by accounting bodies because when the organizations prepare the financial statements in a proper format then it becomes easy for the stakeholders to understand the financial statements of the organizations.  That is one of the main reason for which all the organizations are instructed to prepare their financial statements according to specific format so that everyone can understand the financial information easily.

        If the financial statements are not going to prepared according to format than every organization will go to form the statements according to its own will. Through this not only the quality of the financial statements will suffer but also the stakeholders of the organization might unable to understand the information. Today the investors want to invest in different countries and for this, they demand the financial statements of the corporation to get an idea about the profitability of the corporation and how much return they are providing to their investors. If the financial statements are going to be in unidentifiable format than the investor will unable to understand the financial information and in worst case scenario the investor will not going to invest in the organization (Higgins, 2007).

        By keeping the above-discussed issues in mind the accounting bodies and regulatory authorities are emphasizing on harmonization of accounting practices so that investors can easily invest in other countries and can understand the financial statements easily. The harmonization of accounting practices will improve financial decision making and allow corporations to increase their profitability. Through the harmonization of accounting practices, the chances of manipulation in financial statements also reduce up to a lot of extents. Through different accounting practices, the chances of fraud exist in the organization. However, after harmonization,, these issues will be resolved up to a lot of extents. In short, it can be said that harmonization of accounting standards have huge significance for the stakeholders of the organization.

        The accounting bodies such as IASB & FASB are promoting the harmonization of accounting practices because they know the significance of harmonization and how it can resolve various issues which occur from different accounting standards. It is evident that when there would be only one accounting standard than it becomes easy for the people to u8nderstand and the chances of fraud reduce up to a lot of extents. The harmonization in accounting standards would lead to a reduction in the cost of the organization because after that the organization would not have to spend more cost on preparing statements in different formats (Robinson, et al., 2015).

        There are many hurdles that exist for harmonizing the accounting standards. The first hurdles are the policies of the government of different countries. Different countries have their own rules & regulations and that is why they set standards that think are the best for the organizations. In order to harmonize the accounting practices, government or authorities will have to make new laws which allow the corporation to change their current practices and upgrade according to the practices that are followed around the world. Another major problem that causes a restriction for harmonizing of accounting practices is the implementation of change.

         It is clear that when an organization is going to convert its current accounting procedure to another which being implemented across the globe than the organization will have to change its whole accounting procedure. The employees in the organization will face many difficulties because firstly they will have to be trained so that employees won’t resist to the change. The changing of the whole process will increase the cost of the organization as well. So it means that implementing new standards is not as easy as it seems and there are many issues that resist organization in implementing new standards.

Conclusion to provide brief financial information to the stakeholders of the organization

        If all the above discussion is summarized than it is evident that the accounting bodies and regulatory authorities are emphasizing on harmonization of accounting practices so that investors can easily invest in other countries and can understand the financial statements easily. The harmonization of accounting practices will improve financial decision making and allow corporations to increase their profitability. The accounting bodies such as IASB & FASB are promoting the harmonization of accounting practices because they know the significance of harmonization and how it can resolve various issues which occur from different accounting standards. Different countries have their own rules & regulations and that is why they set standards that think are the best for the organizations. In order to harmonize the accounting practices, government or authorities will have to make new laws which allow the corporation to change their current practices and upgrade according to the practices that are followed around the world.

References of provide brief financial information to the stakeholders of the organization

Higgins, 2007. Analysis for Financial Management. s.l.:Tata McGraw-Hill Education.

Needles, B. E. & Powers, M., 2010. Financial Accounting. s.l.:Cengage Learning.

Nørreklit, H., ed., 2017. A Philosophy of Management Accounting: A Pragmatic Constructivist Approach. s.l.:Taylor & Francis.

Robinson, T. R. et al., 2015. International Financial Statement Analysis, Third Edition (CFA Institute Investment Series). 3 ed. s.l.:John Wiley & Sons.