Barriers to convergence between International and local reporting frameworks

IASB has developed international conceptual framework for financial reporting which is known as IASB framework. It is continuously trying to bring convergence between international reporting standards and countrys' local standards. Many of the countries already have accepted IAS , IFRS as their own reporting standards at the same time many other countries have shown strong resistance in accepting international reporting standards. For example UK has already declared its support for IASB framework whereas US is still following rules based GAAP. IASB and US accountancy board FASB is carrying out joint projects with the common objectives of bringing convergence between financial reporting frameworks. The process of convergence is a very slow one, as there are some major barriers to it. The main barriers to the convergence process are as follows:

(a) Different purpose of financial reporting:

In some countries the purpose is solely for tax assessment, while in other countries it is to help investors to make economic decisions. 

(b) Different legal system:

These present the development of certain accounting practices and restricts options available within a jurisdiction. 

(c) Different user group:

Different countries have different user group and their respective importance. In the USA investor and creditor groups are given prominence while in Europe employees enjoy a higher profile.

(d) Nationalism:

Over time nationalism has demonstrated an unwillingness in accepting another country's standard on international standards that are in existence. 

(e) Lack of strong accountancy bodies:

Many countries don't have strong accountancy bodies which would press for better standards and greater harmonization. 

(f) Cultural Differences:

Cultural differences results in objectives for accounting system differing from country to country