This article tries to explain the concept of harmonization and its need in accounting and reporting, international practices, impact of reforms and globalization on harmonization and reporting, impact of International Accounting Standards (IAS) on Indian accounting and reporting, reason for delay in adoption of IAS in Indian accounting and reporting and what are the various obstacles encountered in the process of harmonization and reporting of practices; and finally offers some suggestions for better harmonization and financial reporting.

Harmonization of accounting standards means the continuous process of ensuring that the Generally Accepted Accounting Principles (GAAP) are formulated, aligned and updated to international best practices (GAAP in other countries) with suitable modifications and fine tuning considering the domestic conditions. It was most needed for an easier and more meaningful comparison of performance of two or more companies of different countries.

Harmonization means maintaining uniformity in financial accounting principles and practices at the international level. It implies international harmony in transactional financial reporting. It aims to narrow the areas of differences and to eliminate undesirable alternative practices in financial reporting. It is a process of blending and combining various practices into an orderly structure, which produces synergistic results. Harmonization involves examining and comparing the different accounting systems in order to note points of agreement and disagreement and then working towards bringing these different systems together. Those who believe that uniformity is desirable would as a first step, need to compare the different systems, then they would need to persuade others that some measure of agreement would be advantageous. They would then work towards harmonization, seriously attempting to remove differences they would be working towards the acceptance of some authorized model, a set of standards. When this has been achieved, there would be uniformity. The steps in the harmonization process, generally speaking, appear to be a comparison move towards harmonization producing agreed standards and then uniformity in this order. It is possible, of course to stop at any point in this process.

Accounting World Magazine, Harmonization, Accounting and Reporting, Generally Accepted Accounting Principles, GAAP, Financial Accounting, Indian Economy, Capital Market Development, Financial Reporting Systems, Indian Companies, International Accounting Standards Committee, IASC, International Federation of Accounting Committee, IFAC, International Auditing Practices Committee, IAPC, Public Sector Undertakings, PSUs.