Is a process of increasing the compatibility
of accounting practices by fixing the limits
to their degree of variation.
 In simplest way, harmonization means not
only bringing out uniformity by reducing
alternatives and differences in procedures
by setting specific bounds, but embraces a
blending & combining the elements of
accounting practices of various countries
into an orderly structure.

There is pressure for harmonization of divergent
accounting practices not only from the users
from financial statements but also from those
who regulate and prepare them. Pressures
comes from investors & financial analysts to
facilitate investment and credit decisions.
 Increased number of multinational
corporations on global arena also calls for
increased harmonization.
 Lack of harmonization in different accounting
standards developed by different countries
also imposes financial burden on multinational
corporations.
 Accounting professional also put pressure
harmonization as it will lead to
internationalization of their profession.

1. It ensures high quality financial reporting
2. Ensures a reliable financial reporting &
disclosures
3. Enables a systematic reviews along with
evaluation of performance of a
multinational corporate unit having
subsidiaries in various countries where in
each country has its own set of GAAP
4. Makes the comparison of the corporate
unit against the domestic & international
peers more easier.
5. It adds to the global credibility of a
corporate unit
6. It provides a level of playing ground
where no country is advantaged or
disadvantaged by its GAAP
7. Sometimes harmonization can prove to
be crucial to the economic development
of a country