The quest for international accounting harmonization: A review of the standard setting agendas of the IASC, US, UK, Canada, and Australia, 1973–1997

For 1973 through 1997, the research examines the evolution of accounting standards to ascertain the extent of similarities and differences in financial reporting practices among the IASC and national standard setters in the US, UK, Canada, and Australia. Collective and individual efforts aimed at minimizing differences to achieve harmonization/compatibility are discussed. The impact of the IASC's modified philosophy for the 1990s, specifically its cooperative endeavors with the G4 standard setters on agenda coordination and harmonization/compatibility of accounting standards, is also investigated. During the 1970s and 1980s, the IASC, US, UK, Canada, and Australia achieved accounting standard compatibility in very few areas. Successes included the funds flow statement and leases. This failure to make significant progress toward harmonization/compatibility can be linked to limited agenda coordination and cooperation between the IASC and national standard setters. The research also reveals that significant periods of time, of as much as two decades or more, passed before the IASC and Anglo-American standard setters attained some form of consensus on agenda items initiated during the IASC's first two decades. The IASC and Anglo-American standard setters entered the 1990s better equipped than in prior decades to engage in cooperative endeavors. By focusing on common themes in their conceptual frameworks and adopting a philosophy of harmonization via cooperation, the IASC and G4 have made considerable progress. Areas where the five standard setters have achieved consensus, or are close to achieving concurrence, include several projects initiated during the 1970s and 1980s. These projects include investments in associates, interim reporting, business combinations, joint ventures, deferred taxes, and pensions. In addition, projects launched by the G4+1 members during the 1990s have often produced compatible standards (or proposals) on a relatively timely basis. Examples include financial instruments, EPS, segment reporting, and comprehensive income. The research also reveals a few areas where consensus has not been achieved, such as accounting for the correction of errors, R&D, and interest capitalization.