Accounting is a way for communicating economic information. An economic language work differs from country to country. Accounting terminology usually expresses the adopted meaning within that particular individual culture. As contacts increase across national borders people gradually use that language outside its culture, misunderstanding will follow as the object is between the sender and receiver. This problem faces the accounting standards themselves. The process has a way to go to make financial statements readily comparable because the current status of things is that greater internationalisation of accounting system will be more or less beneficial for the profession throughout practioners and end users of published accounts.
Firstly we consider the relevance of international accounting throughout the history and its need. Then proceeds to examine the benefits of implementing international standards. Finally we will conclude that there are significant obstacles to accounting harmonization and the current situation of implementing IAS by 2005.
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Historical Background.
The move towards international accounting system has been traced in 1492 when the Italian government decide to create a double entry book keeping in order to find ways to tax commercial transaction in northern Italy. (Frost & Meek) therefore the first international accounting congress look place in St Louis, Missouri. The issues discussed in the earlier congresses mostly were practice oriented. The real next step toward international accounting were in 1950 when Jacob Kraayenhof (1959), founding partner of a major European firm of independent accountants, urges that work on international accounting standards begin. In 1966, Accountant International study group has been formed (AISG) by professional institutes in Canada, the United Kingdom and the United States. .
It was not until the 10th international congress in Sydney in 1972 that firm proposals were put forward and accepted for means to achieve real progress in International harmonization the result was the establishment of international accounts standards committee (IASC).