Two Arguments For Uniformity And Uniformity In Accounting Standards

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The expected gains of global accounting standards are irresistible. As stated by Brown (2011), a high-quality accounting standards will endorse comparability and quality of financial reporting along with the integration of markets internationally and the expansion of national capital markets. For instance, International Accounting Standards Boards (IASB) has developed a single set of high quality and understandable accounting rules which is International Financial Reporting Standards (IFRS). Recently, the IFRS is an obligatory for all countries in European Union (EU) to achieve uniformity for consolidated financial statements of most European listed companies. This has been challenged by Sunder and Fearnley (2006) who state that “a uniform …show more content…
Thus, does uniformity mean any two transactions with any dissimilarity must be treated contradictorily or any two transactions with any similarity must be treated identically. The answers of these questions lead to different clarification. Consequently, there is a well-known argument of Ball (2006) which proposed that uniformity in accounting standards will not yield uniformity in accounting reports. To further discuss this proposition, this essay aims to examine the two arguments for and against the Ray Ball’s proposition. The supportive points include factors to anticipate less than 100% uniformity in accounting rules which are institutional factors and factor of capitalism. Meanwhile, the opposition points towards this argument is the limitations of institutional factors and the issue in actual varieties of …show more content…
As proposed by Walker (2010), the forced adoption of single form of accounting runs the risk of severely restricting the different forms of capitalism that can develop”. Additionally, he also proposes that an imposition of accounting rules that is mainly developed from stock market systems could be counterproductive toward accounting integration. It is important to realize that a unique set of standards are not be able to exist due to difference in companies and their industries and due to difference in users and the information they desire. Pursuing this further, Hall and Soskice (2001) states that ‘varieties of capitalism’ (VoC) has emerge to become the dominant institutional approach to study a comparative capitalism. The two major types of capitalist models are liberal market economies (LMEs) and coordinated market economies (CMEs) which are distinguished by the degree to which a political economy is coordinated or on the contrary. The CME is dependent on non-market relations, deliberative calculation on the part of films, credible commitments while LME is the opposite in terms of arms-length, the operation of supply and demand in line with price signalling, formal contracting, competitive relations and competition (Hall and Soskice 2001a). United Kingdom is an outstanding example for LME while Germany is a preeminent example of

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