This is why the financial statement may not be comparable.
This is why the second source of difference will be interpretation of accounting rules, because of increasing number of cross borders mergers and acquisition of companies as well as global capital market emerge. The financial statements of a large number of enterprises are used outside their own domestic borders but they are interpreted or applied differently.
The third difference in preferred accounting practises. The variety of world accounting practices has been seen by many as significant problem. In fact the problem of analysing accounts from different countries increase finance costs in international capital markets. .
The cost of an accounting system in an multinational is increased both by the cost of designing and running different accounting systems in different countries, and the cost of adjusting accounts .
from different countries to the accounting system of the country of the holding company for consolidation.
The benefits of International accounting.
When differences persist within countries, then there is no comparable financial reporting. Besides, some benefits of international accounting will be considered under three groups: the preparers (business entities), users (investors and analysts), Stock exchanges and regulators. First of all, lets see what could be the benefits for the business entities. According to Ian Wright (2002), business leaders across the European union are demanding their rights to use international accounting standards as soon as possible because of its greater comparability and transparency of corporate reporting and providing a key plan for single European capital market. Although it requires a uniform system in order to avoid the preparation costs for financial reports. For instance a multinational company as Daimler-Chrysler have to prepare seven different reports on its operations to be used to comply with their requirements of the country standards for its subsidiaries.