Despite the ease with which Irish businesses transact with UK businesses using the UK GAAP standard, there are a number of practical reasons for Irish businesses to support the harmonization of reporting standards internationally, and to move from the UK GAAP standards to the International Accounting Standards at this time. The harmonization of accounting standards refers to the global standardization of accounting methods and principles (Collett, 2001). At present Ireland uses the UK GAAP standards of reporting, in common with the United Kingdom. The United States, for example, supports a different method for financial reporting, the US GAAP.
In reality, there is now a global economy; international economic activity has increased and a rapid rate following the introduction of new and the improvement of old technologies. The internet, for example, has done much to facilitate the globalization of capital markets by allowing almost instant communication and information exchange. The most successful businesses operate in an international context and therefore have an interest, not only in being able to function in different countries but also to secure international investors and clients. The competition for investors and clients in a global market economy is intense; non-standard accounting standards become an adherence to businesses that want to participate internationally.
Potential investors and clients, even other businesses, are unlikely to invest or trade where there are accounting standards used that are different to their own. This would require the implementation of a method of converting the reports, which demands both time and resources on the part of the investor, client, or trading business. As the harmonization of standards tends to facilitate the globalization of capital markets, it is financially prudent and ergonomic that Ireland moves from the UK GAAP to the International Accounting Standards.
Please type your essay title, choose your document type, enter your email and we send you essay samples