Benefits of harmonisation and convergence.

On 1 August 2008, the Financial Reporting Foundation (FRF) and Malaysian Accounting Standards Board (MASB) announced their plans to bring Malaysia to full convergence with International Financial Reporting Standards (IFRS) by 1 January 2012.

Among the many justifications put forth then (and which are still equally applicable today) is that there would be one common accounting and reporting language adopted. Full compliance with IFRS would thereafter facilitate

comparability of financial statements prepared by firms and increase transparency.

MASB had opted for a phased changeover to IFRS, together with a proposed calendar of adoption of IFRS. As a start, Malaysia began with the application of FRS 139 Financial Instruments: Recognition and Measurement with effect from 1 January 2010 with the remaining standards progressively adopted over the next two years, 2010 2011. The phased changeover is argued to allow firms sufficient time to prepare themselves for the changeover.

Convergence with IFRS benefits the accounting professionals in a way that they are able to sell their services as experts in different parts of the world. The thrust of the movement towards convergence has come mainly from accountants in public practice. It offers them more opportunities in any part of the world if the same accounting practices prevail throughout the world. They are able to quote IFRS to clients to give them backing for recommending certain ways of reporting. Also, for accounting professionals in the Industry as we as in practice, their mobility to work in different parts of the world increases.

A strong case for convergence can be made from the view point of the investors who wish to invest outside their own country. Investors want the information that is more relevant, reliable, timely and comparable across the jurisdictions. The financial statements prepared using a common set of accounting standards helps the investors to better understand investment opportunities as opposed to financial statements prepared using a different set of national accounting principles.

For better understanding of financial statements, investors have to incur more costs in terms of time and effort to convert the financial statements so that they can confidently compare opportunities. The investors confidence would also be string if accounting standards used are globally accepted. Convergence with IFRs contributes to investors understanding and confidence in high quality financial statements.

Benefits of harmonisation and convergence may cause multinational entities. Economic decision making can be based or standardise financial information. Multinational entities mean a different culture or different investors are doing business and convergence can help in making decision to standardise the financial information so that they are using the same thing in every country and this will be more easy to understand when an investors meet up.

Beside that this convergence also cause international economic groupings which mean people from each country are together in a place. This cause International Economic Groupings (IEG) can work more effectively and capital market can be enhanced. IEG can work effectively in a grouping cause it may have a lot of good ideal from each to do the best and this show that they are more effectively.

For the conclusion, a convergence like this is a good thing to let us learn from good or more expert people and improve our skill and to do the best and more effectively.