TUGAS III AKUNTANSI INTERNASIONAL CHAPTER 1

INTERNATIONAL ACCOUNTING HARMONIZATION

PUTRI AYU PUSPA RENGGANIS

20208970

4EB11

harmonization and standardization of differences in accounting standards applicable

An enforcement or application of a set of standard and narrow standard. Standardization is a set of standards to be applied in all situations. Standardization does not accommodate national differences, and therefore more difficult to be applied internationally. However, standardization was too serious and too ambitious to be achieved and realized. Finally, in the Preface and the 1982 Constitution stated that the goal of harmonization is more necessary for the accomplish. Harmonization is the process of improving komparalititas accounting practices by providing a limit to how many variations. Standard drink Hormonisasi conflict and improve comparability of financial information from different countries-nation bloc. (Choi, et.al, 1999:248)

Harmonization is more flexible and open and not use one size fits all approach. Concept harmonization means that different standards should apply in each State member for the standard "in tune" with each other means that such standards should not be logically contradictory.

Noteworthy, the harmonization of "allow" with adequate disclosure, while the standardization of "require" all companies, if the company wanted to comply with accounting principles generally accepted (GAAP). Thus, the harmonization of the measurement result of different accounting and finance compared to standardization. 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).

IASC was founded in 1973 and consists of members of the IASC organization founded in 1973 and consists of member organizations from ten countries accounting profession. In 1999, IASC membership consists of 134 professional accounting organizations from 104 countries, including Indonesia. IASC goals are (1) formulate and publish accounting standards with respect to financial reporting and promote it to be widely accepted around the world, and (2) work for the development and harmonization of accounting standards and procedures with respect to financial reporting. Some countries such as Singapore, Zimbabwe and Kuwait instead adopt International Accounting Standards as the accounting standards of their country.

pros and cons of international harmonization of accounting standards

Until the present time, 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).

The main reason the presentation of financial statements that meet the standards for the survival of the company itself in the future, both in terms of internal and external users penguna. Public recognition will comprehensiveness and transparency of financial statements of a publicly-listed companies increase the pressure of the business sector to provide financial statements in accordance with the standards.
Other reasons to make it easier for investors who want to make their investment activities in other countries, which requires the financial statements of international standard in order to know the state of the company.

Although the IASB has no power to require all countries to prepare financial statements under International Financial Reporting Standards, to date the agency can be said to be very influential in the process of harmonization. This is not surprising because the capitalist countries, especially the United States played an important role in producing these standards. In other words, harmonization is the harmonization of international accounting standards are based on Anglo-Saxon accounting model, without notice and consider the system of accounting, environmental, economic, social and cultural rights of other countries (Hoarau 1995). Hoarau further said that the resulting standard is dominated by the accounting concepts practiced in the USA. In other words what is now American hegemonic efforts in the preparation of financial statements by the international accounting standards.

Although the IASB accounting standards resulting discuss the guidelines are less detailed and limited scope when compared with the USA version of the accounting standard (Statement of Financial Accounting Standards), IFRS remains based on the concept and the same accounting approach. As a result, the possibility of much conflict with the IFRS financial reporting purposes and the social environment, economy and culture of other countries, especially those that have different characteristics with the capitalist state. More specifically, the standards produced a lot of conflict with Islamic values. This is due to the economic concepts underlying the capitalist Western world accounting standard setting is much different from the concept of Islamic economics.
The resulting accounting standards of Anglo-Saxon model of accounting that recognizes adopts the time value of money, which produces the concept of interest. Meanwhile, Islam explicitly reject the use of the time value of money in carrying out economic activities. This is because the concept is synonymous with usury, and usury is clearly prohibited in Islam. Riba is prohibited in Islam because it shows the injustice of usury. Capra (1994) mentions that the injustice arises because the distribution of profits based on a fixed amount, can damage the price mechanism and led to the allocation of economic resources that lead to the accumulation of capital is concentrated in a particular group of people.

Prohibition against usury has its own implications for the harmonization of international accounting standards. So far the standards of internationally accepted accounting always consider the interest factor, which is clearly prohibited in Islam (Hamid et al., 1993). Examples of the resulting IASB accounting standards (IASC) is accounting for the lease / lease (IAS 17), Accounting for Pension Funds (IAS 19 and IAS 26), and Cost Accounting Capitalization of Borrowing (IAS 23). The standard is essentially the same as the accounting standards issued by the Financial Accounting Standards American Board (FASB), such as pension fund accounting standards (SFAS 87 and 88), Long-Term Debt Amortization (Accounting Principles Board, APB 12), Interest on Receivables and Payables (APB 21), Leasing (SFAS 12), Resturkturisasi Debt (SFAS 15), Reporting Debt Retirement (SFAS 88) and the repayment of debt (APB 26).
Another issue to consider is the issue relating to the valuation of the assets. In the Anglo-Saxon accounting, valuation of an asset, especially inventories and securities are generally based on the concept of conservatism. This concept recognizes income or loss or reduction of assets despite the decline has not been realized. In contrast, the concept is to delay recognition of revenues or increase in value of assets to income or an increase in the value of these assets are actually realized. The consequences of this concept is the use of the method of inventory valuation and short-term securities based on the lower of cost and market value (lower of cost or market). Meanwhile, for the purposes of calculating zakat, which is one of the purposes of reporting based on the teachings of Islam-Islam assess both types of assets are based on net realizable value or net realizable value (Gambling and Karim 1991). Thus it is clear that Islam does not recognize the concept of the lowest value between cost and market prices, such as those used in capitalist accounting.

The third problem is the application of the concept of sustainability (going concern). Use of this concept memungkinakn use historical cost valuation of assets based on the measurement to demonstrate objectivity. On the basis of historical cost, the value of assets on a particular date (the date of the balance sheet) will be equal to the value of assets on the date the asset was first acquired. The main reason the application of the concept of going concern are: (1) to allow for the classification of assets and liabilities into current and noncurrent group, (2) allows for the matching (matching) between revenue and costs.

From the standpoint of Islam, both of them may be questionable and irrelevant (Gambling and Karim 1991). In Islam, the classification of assets into current and noncurrent basically meant to determine the amount of wealth that will be used in determining the amount of zakat. Current assets are expected to be consumed, or sold to generate cash in the period of time in which the charity will be imposed on such property. While non-current assets, will remain detained or kept in the period beyond the period of zakat (Abdel-Magid 1981). On the basis of this, financial statements must be able to present information about the assets, which can be used as the basis for the imposition of zakat. Thus the zakat assessments will determine the method of valuation of assets. Appropriate method to assess the assets relevant to the purposes of calculating the net realizable value is the alms or assessment methods suggested by Chambers (1966) that is continuously contemporary accounting (COCOA).

On the basis of the method Cocoa assets should be assessed according to market value at balance sheet date. So each asset must be assessed individually, separate from the company's overall wealth. Consequently, in the context of Islam there is no recognition of assets such as goodwill, because goodwill can not see his form and shape can not be individually assessed separately from the company's overall value.
Another thing that is contrary to the teachings of Islam is the use of the concept of economic substance over legal form. Anglo-Saxon accounting model clearly separates the economic substance of a transaction with the legal status of the transaction. On the basis of this concept, if a transaction has economic substance of the terms of the criteria as an element of financial statements (because they meet the definition, can be measured and recognized in the financial statements), the transaction can be recognized in the financial statements even though not legally recognized. The classic example is a machine that was hired by the company through a capital lease contract. If the economic substance meets the criteria as an asset (as stipulated in the standard), then the machine can be recognized as leased property the tenant and reported on the balance sheet as a tenant property. However, from the juridical aspect of the machine remains the property owners rather than renters. This concept, clearly contrary to the concept of ownership in Islam (Karim 1995).

On the basis of different points of view above, it is quite reasonable to say that the accounting should be developed in accordance with the environmental conditions in which the accounting will be practiced. Accounting practices of the capitalist, obviously not everything can be practiced in an environment that Islam breath because the concept is clearly different and many are contradictory.

the meaning of reconciliation and mutual recognition (reciprocal) of accounting standard differences

Two other approaches are proposed as a possible solution is used to solve problems related to the content of cross-border financial statements: (1) reconciliation, and (2) mutual recognition (which is also referred to as "imbalbalik" / reciprocity). Through reconciliation, foreign companies can set laporankeuangan using home country accounting standards, but should menyediakanrekonsiliasi between accounting measures (such as net income and stock ekuitaspemegang) in the country of origin and in countries where the financial statements dilaporkan.Sebagai example, the Capital Market Commission United States (SEC). Recognition occurs when the parties together outside the home country regulator of financial menerimalaporan foreign companies which are based on the principles of state asal.Sebagai example, the London Stock Exchange accept financial statements based on GAAP reporting ASuntuk made ​​by foreign companies.

With line trading capital then hermonisasi be important to the problems associated with the content to the content of cross-border financial reporting.
Approach done by way of reconciliation and mutual recognition.
With a complete harmonization of financial reporting based on different principles.

organization that promotes harmony and have an important role in setting international accounting standards

Harmonization in the International Accounting Standards, which made ​​the organization into an international accounting standard setters.

Six organizations have become a major player in the determination of the international accounting standards and in promoting international harmonization of accounting:

1. International Accounting Standards Board (IASB)

2. Commission of the European Union (EU)

3. International Organization of the Capital Market Commission (IOSCO)

4. International Federation of Accountants (IFAC)

5. Intergovernmental Working Group of Experts on the United Nations 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. Accounting Standards Working Group in the Organization of Economic Cooperation and Development (OECD Working Group).

EU's new approach and relate it to the integration of European financial markets.

One goal is to achieve the integration of EU financial markets of Europe. To achieve this goal, the EC has introduced a directive and take a huge initiative to achieve a single market for:

• Acquisition of capital within the EU;

• Creating a common legal framework for securities and derivatives markets are integrated;

• Achieve a single set of accounting standards for companies whose shares are listed.
Directive Fourth, Seventh and Eighth Fourth EU directive, issued in 1978, is a set of accounting rules in the most extensive and comprehensive framework.
Seventh directive, issued in 1983, addresses issues consolidated financial statements.
Eighth Directive, issued in 1984, discussed various aspects of professional qualifications that are authorized to carry out the audit as required by law (mandatory audit).

Is the EU harmonization efforts have so far?

Fourth and Seventh Directives have a dramatic effect on the financial reporting across the EU, namely bringing the accounting in all EU member states to stage a good uniformity and relatively adequate. This directive will harmonize the presentation of profit and loss (income statement) and balance sheet and increase the minimum additional information in the record, specifically the influence of tax rules on disclosure of the reported results.

New Approach to EU and European Financial Market Integration
Commission announced that the EU needs to move precisely in order to provide a clear signal that companies are trying to do the recording in the United States and other world markets will still be able to survive in the EU accounting framework. EC also stressed that the EU strengthens its commitment to the international standard-setting process, which offers the most efficient and quick solutions to problems faced by companies operating on an international scale.

In 2000, the EC adopted a new financial reporting strategy. The interesting thing about this strategy is the proposed rule that all EU companies listed in regulated markets, including banks, insurance companies and SME (small and medium sized enterprises), prepare accounts according to IFRS konsolidais.