The accounting practices of the US and other countries vary significantly. World-wide accounting uniformity is an unattainable goal. This is due to differences in the economic, political and social values, and the different developments and goals of each individual country. However, International Accounting Standards Committee (IASC) and the International Organization of Securities Commissions (IOSCO) were formed to promote some kind of accounting uniformity throughout the world.

Accounting is often called as the language of business. The basic function of any language is to serve as a means of communication. The financial result of different companies cannot be compared and evaluated unless entire information is available about the accounting methods, that have been used. The variety of accounting practices have made it difficult to compare the financial results of different companies. Further, the alternative accounting methods have also enabled the reporting of different results even by the same company.

The information present in the published financial statement is very important to external user; it is the responsibility of the accounting professional to ensure that the required information is presented properly. The information contained in the financial statement has to follow the standards carefully. In this context, unless there are reasonably appropriate standards, neither the purpose of the individual investor nor that of the nation as a whole can be served. The purpose will be served, if the accounting methods used by different firms for presenting information to the investor allows correct comparisions to be made.

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