3.

4 Harmonization and Convergence of Standards Harmonization of Accounting Standards the process of increasing the compatibility of accounting practices by setting bounds for the degree of variations (Nobes, 1992). Can be traced back to the political economy of the late 1960s and early 1970s. One of the objectives of the IASC in its 1992 Constitution to promote worldwide acceptance and observance of a common language in the presentation of financial statements. Accommodates national differences; does not adopt a one-size-fits-all approach

Factors that triggered harmonization of accounting standards: A. Need for information including accounting information from business enterprises. B. Growth of Multinational corporations (MNCs) Convergence of Accounting Standards The agreement of all standard setters on a single set of high quality international accounting standards to be used by all preparers of financial statements. New constitution of IASC Foundation revised in July 2002 expanded its objectives to bring convergence of national accounting standards and IAS to higher quality solutions. Eliminating the remaining significant difference between two sets of standards. Important to regulators such as the SEC to reduce uncertainty about the comparability of published accounts thus enhancing transparency. Helps in making informed economic decisions about the companies. (standpoint of users of financial statements) Burden of financial reporting would be lessened and the cost of financial statement preparation would be reduced. (standpoint of MNCs)

Support of International Accounting Standards Slow in the 1970s and even in the 1980s May 2000, IOSCO formally accepted IASCs 30 core standards (called IASC2000 Standards) June 2000, EU issued a communication that all its listed companies would be required to prepare financial statements using IAS effected January 1, 2005. More than half of the OECD member countries and many Asian countries, including the Philippines have either adopted directly or in the process of adopting to IAS G8, the Bank of International Settlements, the Federation of Euro-Asian Stock Exchanges (with 20 member exchanges in 18 nations), and the Basel Committee on Banking Supervision (an international organization of bank regulators) have all endorsed IAS Early converts to IAS include: Belgium, France, Germany, and Italy. Others include Hong Kong, Korea, Malta, Mongolia, Turkey and Zimbabwe and more. Greece adopted effective on January 1, 2003, Russia started in January 1, 2004 and Australia adopted on January 1, 2005.

Adoption of the IAS in the Philippines by: 1. The Philippine SEC, a member of the IOSCO.

2. The Board of Accountancy of the Professional Regulation Commission, tasked to implement the General Agreement on Trade in Services. 3. PICPA, a member of the IFAC and the IASB 4. World Bank and Asian Development Bank (ADB), which both recommended the adoption of IAS. Philippine Accounting Standards Council (ASC) a. b. Started the move to adopt in IAS in 1995. Approved two Statement of Financial Accounting Standards (SFAS) on May 3, 1996 which are: IAS 23 from SFAS No. 25 Borrowing Cost IAS 11 from SFAS No. 26 Construction Contracts 1997, ASC decided to move totally to IAS