The harmonization of world accounting standards is viewed by many accountants, analysts, standard setters, and others as being among the most important issues facing business throughout the world. Advocates of harmonization seek to establish a common

set of international accounting and reporting standards. Such a task has proven formidable, however. Identify factors that would hinder the process of harmonization of accounting standards.

Accounting standards throughout the world exhibit a great breadth of scope, complexity, and rigidity. Some countries currently have in place standards that are relatively weak when compared with those of the United States, for example. The United States typically is viewed as having the most highly developed and rigid accounting standards in the world. The rigidity, completeness, and complexity of U.S. standards is due in no small part to the role of the Securities and Exchange Commission (SEC). The SEC is a government agency that has the right (granted to it by the United States Congress) to set accounting standards in the United States, but has delegated this standards setting process to the private sector. This does not mean, however, that the SEC is not involved in the process of standard setting.

The SEC assumes an active role in the establishment of accounting standards. Any set of international accounting standards must be accepted by the SEC if such standards are to be allowed for non-U.S. companies seeking to sell securities in U.S. capital markets. The SEC has a history of demanding strict accounting standards. A set of international accounting standards likely will not be as strict as existing U.S. standards as a result of the need for compromise among various nations who have different standard-setting philosophies. These compromises likely will result in the SEC rejecting such international standards.

National pride is another issue that will complicate the harmonization of accounting standards. The leaders and citizens of many countries would not welcome a set of international standards heavily based on the U.S. model, for example. Finally, the question of the degree of uniformity of accounting standards arises. The degree of uniformity may be limited by the differences in the economies and cultures of the nations of the world.