Harmonization of Accounting Measurement Practices in South Asia

This study examines the extent of harmonization of selected accounting measurement practices in three South Asian countries, India, Pakistan and Bangladesh. The study is based on a sample of 566 non-financial companies for the financial year 1997–1998. The degree of harmonization is measured using Van der Tas's (1988) I index and Archer, Delvaille, and McLeay's (1995) modified C index. The values of the I index and the C index show a relatively higher degree of harmonization in the areas of property, plant and equipment, foreign currency translation and long-term investment, and a lower level of harmonization in the areas of inventory, amortization of goodwill and leases. The results suggest that low harmonization levels are both due to the degree of flexibility available in selecting benchmark treatments in some International Accounting Standards (IAS) and also to non-compliance by companies with IAS-mandated requirements. Significant further work is required by South Asian Federation of Accountants and the other regional accounting bodies if the goals of regional and international accounting harmonization are to be achieved.