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Volume :14 Issue : 56 1988      Add To Cart                                                                    Download

THE INTERNATIONAL HARMONIZATION OF ACCOUNTING STANDARDS – AN ANALYTICAL COMPARATIVE STUDY – APPLIED TO THE ACCOUNTING STANDARDS OF BOTH KUWAIT AND SAUDI ARABIA

Auther : By: Dr. Mohammed Matar

            
             This research aims at defining the economic, social and cultural factors that encourage or discourage the international harmonization of accounting standards.  It also aims at exploring to what extent this harmony exists between the accounting standards in Kuwait and in Saudi Arabia on one side, and the international accounting standards issued by the IASC on the other.

           This study is divided into two main sections.  In the first section, we discuss the theoretical foundations of harmonized accounting standards and their importance from the point of view of practitioners and users of accounting information.  In the second section, we presented an analytical comparative study in which we define in detail all the aspects of harmony and diversity that exists in the Kuwaiti Standards of “Disclosure” as compared with both the Saudi and International Standards.

           Our choice of these standards in particular as a model for analysis is based on two main reasons.  First, they are in fact the only standards, which jointly exist among the three sets of standards.  Second, they have vital importance in preparing and communicating financial statements.

           This study reveals several important facts, which can be summarized as follows:

 1.     In its current state, the Kuwaiti standard of “Disclosure” is inefficient to a far extent as it fails to meet the fundamental requirements of adequate disclosure needed for businessmen.  Its diversity as compared with the international standard of “Disclosure” reaches around 74%.

 2.     On the other hand, the Saudi standard of “Disclosure” realizes a high level of harmonization with the international standard.  This harmony reaches around 75%.

 3.     Although all the factors and requirements of harmonization between Kuwaiti and Saudi accounting standards are available, the areas of diversity between them are so high that they reach about 80%.

 4.     It is necessary to revalue the “Accounting Guideline No. 1” issued on January 1987 by the Ministry of Industry and Commerce in Kuwait.  This revaluation must lead to more harmonization between this guideline and both the Saudi and international standards of “Disclosure”.

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