Development of Harmonization in the 21st Century - Is Financial Accounting Harmonization Possible and can it be Measured?

Abstract

Background: Over the years there has been an active debate in the accounting community on the harmonization of accounting standards on an international level. The same set of rules would make comparison easier for users. An attempt to harmonize financial accounting is currently being attempted by the US organization, the Financial Accounting Standards Board (FASB) and their international counterpart, the International Accounting Standards Board (IASB).

Purpose: The purpose of this thesis is to find out whether it is possible to harmonize financial accounting and to see whether it is possible to measure harmonization.

Delimitations: This research aims to look at the harmonization process, with a focus on the EU and the United States only. We have decided to choose these particular regions for comparison due to the current short-term convergence process that the two regions are presently involved in.

Methodology: This is a descriptive case study in the form of an interim report covering the short-term convergence process. Furthermore, we will describe, through the perspective of experts in this particular field, the most applied methods of measuring harmonization.

Conclusions: We have drawn the conclusion that harmonization can be considered possible. Both the FASB and the IASB seem to be cooperating well in the short-term projects. Financial accounting harmonization is, to a certain extent, measurable. However, it is difficult to find an exact measurement of the achieved level of harmonization.