Reasons for differences in accounting and financial reporting internationally

Lack of compatible accounting standards across the global capital market hinder credible communication and exchanging information between professionals. Sources of variation in accounting and financial reporting The lack of convergence in accounting and financing standards creates many challenges to business and harmonization of financial statement in multination companies. The differences in the financial reporting standards can be attributed to the geo-political difference between nations, inflation, religion, culture, education and experience of accounting and financial systems as well as legal frameworks in each region. ’ The legal frameworks regulating the accounting profession vary from one nation to another. With some nations have a more specific approach to accounting code while other nations adopts a general approach in addressing financial issues such as cash flow statement , foreign currency translation among other critical global financial issues.