The internationalization of accounting standards has also had critics. As early as 1971 (before the IASC was formed), some stated that international standards had been too simple a solution for a complicated difficulty. Arguing that accounting, as a social science, has built-in flexibility, critics maintained that the capacity to adapt to widely various circumstances is 1 of its most significant values. They doubted that international standards can be flexible adequate to manage differences in national backgrounds, traditions, and economic environments, and some thought that internationalization would be a politically unacceptable challenge to national sovereignty. A lot of of these doubts and fears continue to become expressed currently.
Critics also question no matter whether comparability would be the right goal of financial reporting. They worry that reflecting the underlying reality of a company’s performance and financial position (that's, achieving a fair presentation) could be sacrificed in pursuit of achieving comparability. They also fear that a international monopoly standard-setter will inhibit innovation along with the development of far better high quality standards. Finally, there are actually questions about whether comparability is often accomplished without having right enforcement and as long as firms’ reporting incentives differ across countries.
Other observers claim that large international accounting service firms are employing international accounting standards as a tool with which to expand their markets. Multinational accounting firms, they say, are indispensable to apply international standards in national environments where such standards could appear distant and complex. As international monetary institutions and international markets insist on the use of international standards, only large international accounting firms will probably be in a position to meet the demand. Lastly, some critics sustain that international standards are not appropriate for little and medium-sized firms, especially unlisted ones with no public accountability.
Standards written to meet the requirements of users within the world’s capital markets are unnecessarily complicated and call for too much detailed disclosure for these kinds of organizations. In such firms, there's typically no separation among ownership and management, and shares modify hands infrequently-perhaps only on succession in a family business enterprise.
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