Question 1A. The international standardization of accounting standards benefits in different ways which are asIt helps to improve the process of comparing the financial statement of different companies working in different countries. This is due to the fact that having a standardization process ensures that all organization follow a uniform accounting standard due to which it allows the user of the financial statement to make a comparison between different companies. This ensures that the decisions taken by the investors are better and helps to verify the actual result based on which better decisions are taken (McGregor, 1999). This helps the stock exchanges as having uniform accounting standard across all economies ensures that the user of the financial statement are able to compare the share prices.
This ensures an easy process for being listed on different stock exchanges and simplifies the overall process through which better decisions are taken. This ensures that the entire process for the share to be listed gains uniformity and thereby permits company to save on the additional expenses that have to be incurred while looking to be listed. It helps to save on the cost for the company as having a standard accounting standard ensures that a particular accounting standard is applicable and accepted.
This will ensure that the company will not have to make changes based on the different accounting standards that different economies follow. It will thereby reduce the cost for the organizations and will provide the required mechanism through which a financial statement will be accepted everywhere (McGregor, 1999). Having an international standard proves beneficial especially for developing countries as they don’t have to develop a national standard body and can follow the universally accepted accounting standards.
This will help the developing economies to be able to ensure that the scarce resources are not directed towards developing a national accounting standard body but instead following the international (Saudagardan, 2001) Thus, using an international standard for different accounting standards benefits an organization and an economy in different ways which helps to improve the overall productivity of the business. B. The disadvantages of international standardization of accounting standards are as belowThe major disadvantage of adopting an international accounting standard is that the process of implementing it is costly.
This is primarily due to the fact that adopting an international accounting standard will require that the national accounting body undergoes changes and looks towards adopting the international accounting standard. This will require personnel who understand the international standard, proper monitoring and changes in infrastructure through which the new system which looks to match the international standard is adopted (McGregor, 1999). The adoption of international accounting standard requires that standards are developed which are more detailed like the national standards. The fact that the international accounting standard hasn’t been developed and changed as the national accounting standard will thereby require major ramifications and changes through which the accounting standard becomes more detailed.
This will help the organization and the user of financial information to be able to understand the different aspect of the accounting standards and ensure full applicability. This is an aspect which is presently missing in international accounting standards and is one of the major drawbacks which is making it difficult to implement it over all organizations (Saudagardan, 2001).