EFFECT OF GLOBALIZATION ON ACCOUNTING SYSTEM

Abstract

This paper explores the idea of globalization in economy in general and its role in that process in
order to develop new directions for the accounting concepts. Globalization is a reality in today’s
world. As globalization intensifies the need for complex financial information becomes obvious.
Expanding capital markets require analysis of financial statement prepared under diverging
accounting standards. Investors believe that the lack of common financial statement increases the
risk of an investment and affects the free flow of world capital. A single set of accounting
standards would bring great benefits to the investors and would reduce the cost of accessing
capital markets around the world. The convergence of accounting standards would assure
enhanced comparability, greater reporting transparency, more efficient capital markets.