Critically evaluates the process of global harmonisation of financial reporting

The information furnished by financial statements are aimed at different stakeholders like shareholders, management, regulatory bodies, suppliers, creditors, lenders, competitors, researchers, and the society at large.
The International Financial Reporting Standards (also known as IFRS) was conceptualised and developed by the International Accounting Standards Board (IASB) in 2001. After one year of inception of IASB, the member states of European Union (EU) committed to adapt IFRS standards for all listed corporations under their jurisdiction. Such regulatory enforcements were due to come into effect from 2005. In 2003, the first IFRS was officially issued and by this time almost 19 countries were required to comply with global reporting standards. Nearly 70 countries have since then mandated IFRS for listed companies and further 23 countries have either allowed listed companies to voluntarily adopt IFRS or have mandated IFRS in listed entities (Ramanna and Sletten, 2009, pp.1-5).
In the year 1985, Piper and Samuels, defined ‘harmonisation’ as the process of bringing the current international accounting standards into some sort of agreement so that the financial statements of different entities from different nations are prepared as per a common set of principles of disclosures and measurements (Samuels and Piper, 1985).
Harmonisation of financial reporting would increase the level of agreement related to presentation of information disclosure in practicing accounting standards between countries. The process of harmonisation will ensure development of a single global community irrespective of the diversity of stakeholders. The process will increase awareness among investors in capital markets and also develop a sense of responsibility in publicly traded firms regarding appropriate financial disclosures (Roberts et al., 1998). Harmonisation of financial reporting will facilitate undisputed international transactions by minimising exchange