Basically an announcement of accounting standards or rules issued by the official authorities in the particular environment of general guidelines that can be used by management to produce financial statements. With the accounting standards, financial reports are expected to present information that is relevant and credible.
Harmonization versus Standardization
Globalization also carries the implication that things that were once considered the authority and responsibility of each country is no longer possible is not affected by the international community. Similarly, financial reporting and accounting standards.
One of the qualitative characteristics of accounting information is to be compared (comparability), including international accounting information also must be compared as it is important in the world of international trade and investment. In the event wanted to obtain full comparability is broadly applicable internationally, required standardization of international accounting standards.
On the other hand, the existence of certain factors in a country still needed to make the national accounting standards in force in that State. It can be seen in the comparison view of financial accounting standards in Indonesia and the United States in advance. In the Indonesia Financial Accounting Standards Accounting for Cooperatives which are not necessarily required in the United States. Based on this, the less likely and less feasible to create an international accounting standards are complete and comprehensive.
Concept is more popular than standardization to bridge the wide variety of accounting standards in different countries is the concept of harmonization. Harmonization of accounting standards is defined as minimizing the differences in accounting standards in various countries (Iqbal, 1997:35).
Harmonization can also be interpreted as a group of countries that agree on an accounting standard that is similar, but requires the implementation does not follow the standard should be disclosed and reconciled with mutually agreed standards. Institutions that are active in the business harmonization of accounting standards, these include the IASC (International Accounting Standard Committee), the United Nations and the OECD (Organization for Economic Cooperation and Development). Some of those who benefit from the harmonization of these are multinational companies, international accounting firms, trade organizations, as well as the IOSCO (International Organization of Securities Commissions).
PRO AND CONS OF INTERNATIONAL ACCOUNTING STANDARDS harmonization
Western countries are still heavily promoting the need for harmonization of international accounting standards. The main purpose of these efforts is to improve the comparability (comparability) of financial reporting, especially for multinational companies operating in various parts of the world. Not surprisingly, the western side to form a body called the International Accounting Standards Committee (IASC), which has now changed its name to International Accounting Standard Board (IASB). The agency is in charge of producing international accounting standards (International Financial Reporting Standards-IFRS).
Today the harmonization of accounting is a challenging and controversial issues relating to the creation of accounting standards and market regulations in a professional manner. The discussions are done today focuses on the experiences of North America, Britain and mainland Europe (Hergarty 1997, Zarzeski 1996, Bayless et el, 1996). International accounting discourse was characterized by a major trend in support arguments about the importance of the harmonization program.
Supports the view that international harmonization is harmonization (even standardized) has many advantages. The advantage of harmonization is the number of international comparability of financial information. Comparability will eliminate misunderstandings reliability of financial reporting “foreign” and would remove one of the most important obstacles in the flow of international investment. The second advantage of harmonization is saving time and costs that were previously produced to consolidate the financial information that is different when more than one report is required to meet international legal practice or different.
the meaning of reconciliation and mutual recognition (reciprocal) of accounting standard differences
Some say that the determination of the international accounting standards is a very simple solution for complex problems. Furthermore, it feared that the adoption of international standards will lead to “excessive standards”. Companies must respond to the pressure composition of the national, political, social, and economic and increasingly made the MAGs to meet additional international regulations are complicated and costly. Reconciliation and Recognition With Two approaches are proposed as a solution that may be used to overcome the problems associated with cross-border financial report:
Through reconciliation, a foreign firm can prepare financial statements using accounting standards country of origin, but must provide a reconciliation between the accounting measures (such as net income and shareholders’ equity) in the country of origin and in countries where financial statements are reported.
2. Mutual recognition (which is also referred to as the “payoff” / reciprocity)
Mutual recognition occurs when the regulator outside the country of origin to receive the financial statements of foreign companies which are based on the principles of country of origin.
3. International accounting standards are used as a result of:
International treaties or political
Voluntary compliance (or being pushed in a professional manner)
Decision by the international accounting standards-making body
Application of International Standards
International accounting standards are used as a result of:
International or political 1.Perjanjian
2.Kepatuhan voluntarily (or being pushed in a professional manner)
3.Keputusan by international accounting standards-making body
Major International Organizations Promoting Harmonization of Accounting
Six organizations have become a major player in the determination of the international accounting standards and in promoting international harmonization of accounting:
1.Badan International Accounting Standards Board (IASB)
2.Komisi European Union (EU)
3.Organisasi International Capital Market Commission (IOSCO)
4.Federasi International Accountants (IFAC)
Intergovernmental Expert Working 5.Kelompok United Nations on International Standards of Accounting and Reporting (International Standards of Accounting and Reporting – Isar), part of the United Nations Conference in Trade and Development (United Nations Conference on Trade and Development-UNCTAD)
6.Kelompok Work in Accounting Standards Organization of Economic Cooperation and Development OECD Working _Kelompok)
International Accounting Standards Board
International Accounting Standards Board (IASB), formerly AISC, founded in 1973 by professional accounting organizations in nine countries.
COMMISSION RESPONSE TO THE CAPITAL MARKET AS IFRS
However, the SEC also stated that three conditions must be met by the company before the SEC can accept IASB standards are:
A. Standards must include the core accounting provisions that determine a comprehensive basis of accounting and generally accepted.
2. Standards should be high quality, resulting in comparability and transparency, and provide full disclosure.
3. Standards must be invested and applied strictly.
EUROPEAN UNION (EU)
One goal is to achieve the integration of EU financial markets of Europe. To achieve this goal. EU directive has been introduced and taken a huge initiative to achieve a single market for:
A. Acquisition of capital in the EU
2. Create a common legal framework for securities and derivative markets are integrated
3. Achieve a single set of accounting standards for companies whose shares are listed.
CAPITAL MARKET COMMISSION INTERNATIONAL ORGANIZATIONS
The international organization consists of a number of capital market commission regulators of capital markets in over 100 countries. According to the budget division of the opening of the IOSCO:
Capital market authorities decided to work together in ensuring better market regulation, both domestic and international level paad, to maintain a fair marketplace, efficient and healthy:
A. Mutual exchange of information based on their respective experiences to encourage the development of the domestic market.
2. Unify the efforts to create standards and effective surveillance of international securities transactions.
3. Provide assistance together to ensure market integrity through the application of strict standards and effective enforcement against offenses.
INTERNATIONAL FEDERATION OF ACCOUNTANTS
IFAC is a world-class organization that has 159 outspoken members in 118 countries, representing 2.5 million people from accountants. Founded in 1977, IFAC’s mission is “to support the development of the accounting profession with standards harmosisasi so that accountants can provide consistently high quality services in the public interest”.
Most of the professional work done by committee remains IFAC. At the time of this writing, the committee remains consist of:
A. Insurance agencies and international audit standards
5. Professional accountants and business
6. Public sector
7. Audit transnational
Intergovernmental Working Group of Experts of the United Nations on international standards of accounting and reporting, as part of the United Nations Conference in Trade and development
Isar was formed in 1982 and is the only inter-governmental working group to discuss accounting and auditing at the corporate level.