STANDARDIZATION AND HARMONIZATION
One driving force to develop a global accounting system is the desire to underwrite securities in any, or all, of the world's capital markets using a single set of financial statements. A positive incentive for a capital market to support a global accounting system is the enhancement of its volume of business by being able to participate in underwritings in other capital markets. Reinforcing the positive incentive is the realization that a capital market, which ignores the development of a global accounting system, may find itself with a unique set of accounting standards while the rest of the world relies on a common set of accounting standards. This would lead to an irretrievable loss of business. The desire for potential gain in business by participating, and the fear of a potential loss of business by not participating, encourage support of the concept of a global accounting system regardless of how officials of capital markets may feel about the matter. Opponents to a global accounting system certainly can delay the process, but they may not be able to prevent its eventual success.
The globalization of corporate activity, coupled with economic and political integration of large groupings of nations, are engines of change in accounting practices. Indeed, one might say that change is being pushed on the accounting profession by commercial interests, which find it difficult to accept the necessity of adopting a different set of accounting standards as business activities cross national borders. Two complementary approaches are being taken to tear down the Tower of Babel of Accounting Practices. One is standardization of accounting practices, whereby all nations agree to a common set of standards. The other is harmonization of accounting principles, which attempts to eliminate disparities and narrow differences between accounting systems.