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What are disadvantages of adopting international accounting standards?
Wiki User
∙ 11y ago
Although this is choppy, here is a quick run down of somedisadvantages of an international harmonization of accounting: -Political reasons -Nationalism- will the public accept? The U.S. is still on the standard system for measurement, using this as an example, would a country like ours really want to stimulate this juxtaposition? -Dennis Beresford, former chairman of the FASB states that everyone who seriously considers global accounting harmonization as a potential method affirms that nationalism is one of the top constraints to becoming a reality. -Already a global capital system- those companies that see a benefit from using an international approach will do so and those companies that do not see benefits will not. Those that make the wrong decision will loose out on the opportunity. Although this is choppy, here is a quick run down of some disadvantages of an international harmonization of accounting: -Political reasons -Nationalism- will the public accept? The U.S. is still on the standard system for measurement, using this as an example, would a country like ours really want to stimulate this juxtaposition? -Dennis Beresford, former chairman of the FASB states that everyone who seriously considers global accounting harmonization as a potential method affirms that nationalism is one of the top constraints to becoming a reality. -Already a global capital system- those companies that see a benefit from using an international approach will do so and those companies that do not see benefits will not. Those that make the wrong decision will loose out on the opportunity.
Wiki User
∙ 16y ago
Wiki User
∙ 11y agoOne of the disadvantages of adopting a single standard is that capital markets are not the same in different countries. Businesses in one country may depend primarily on bank financing to raise capital; their financial statements might want to emphasize conservativeness and a strong balance sheet because the banks are only interested in repayment with interest; they is not speculating. In other countries, the primary source of capital is selling stock; a company in such a country may want to maximize its profitability over its balance sheet.
Another disadvantage is the cost involved in changing from a country's traditional accounting rules to a standardized accounting system.
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