International Harmonization: Cautions from the Australian Experience

• Published in: Accounting horizons 2001-06, Vol.15 (2), p.171-182
• Main Authors: Collett, Peter H, Godfrey, Jayne M, Hrasky, Sue L
• Format: Article
• Language: English
• Subjects: Accounting; Accounting standards; Australia; Capital markets; Economic reform; Exposure drafts; Financial reporting; Harmonization of laws; International accounting standards; Policy making; Standardization; Studies
• ISSN: 0888-7993; 1558-7975
• DOI: 10.2308/acch.2001.15.2.171

Global harmonization of accounting is a challenging and controversial issue currently confronting accounting standard setters and market regulators internationally. To date, Australia is further along in its international harmonization program than any other country with an established standard-setting regime. While no country's national standard-setting arrangements are likely to be subject to political pressures identical to those recently exerted in Australia, there are lessons to be learned from the Australian events. Given the political nature of standard setting, it is not surprising that the Australian experience indicates that pushes for harmonization are not necessarily what they seem. This paper describes the Australian experience and identifies some of the political drivers of recent standard-setting reform initiatives. It demonstrates how the rhetoric of harmonization can divert attention from politically motivated changes to the fundamental basis of standard setting. Using the harmonization banner to garner support in principle, parties with vested interests can push regulatory agendas that potentially subrogate user needs.