SOLUTION
The greatest advantage attributed by advocates of the harmonization of accounting standards is that international financial information would be comparable. Consequently, the concerns about the reliability of foreign financial statements would be alleviated ;and the free flow of international investments would be enhanced. Harmonization is also seen as resulting in improved risk analysis which would result in the lowering of interest rates.
Another advantage is that the time and money now spent to consolidate divergent financial information would be saved. Presently, many adjustments, often arbitrary and sometimes base on faulty assumptions are needed.
A third advantage would be the tendency for accounting standards to be raised to the highest level to be consistent with local economic, legal and social conditions. This is seen as overcoming the presently deficient accounting information presently supplied by developing economies.
Critics of harmonization hold that it is neither practical or perhaps even valuable. They point to the spotty record of domestic standard setters in the United States where they are well-funded and widely supported. They also argue that a well developed global capital market already exists and has evolved without uniform accounting standards; consequently, there is no compelling need to harmonize standards. Other critics indicate that widespread cultural differences, especially language, make harmonization an almost impossible goal. Finally, some individuals feel that the issue of legal enforcement of standards may be an insurmountable problem