Five Star enterprises is a multinational company situated in Muscat and is operating in more than 26 different countries. Majority of multinational companies are facing a problem that accounting rules are different around the world. Same is the case with Five Star enterprises. While preparing their statements, they often have to prepare them twice, once in their home country in accordance with the home country rules and once abroad in accordance with the foreign rules. Additionally, every region has different historical backgrounds, norms and political systems. They also have different patterns of financial accounting practices.

Due to all these factors and practices, businesses are under high risk by treating same problems differently all over. Likewise others, Five Star enterprises also faces difficulties while preparing their financial results. The management finds it risky, when same company operating in different countries follows different pattern of reporting. To consider these different accounting rules, now throughout the world, there is strong need of international harmonisation, and nearly all the countries in the world now support to develop a set of international accounting standards.

It focuses on narrowing the areas of difference and to eradicate undesirable alternative practices in financial reporting. It is process of merging and combining various practices into an organized structure, which produces collaborative result. It is believed some companies have a public accountability to a great variety of interest groups. These differences which are in the mind of accountants lead to different views on what is suitable accounting treatment.

1. You are the country manager of Five Star enterprises Oman. Your head office in Italy, is receiving collective feedback from all the branches. Being the representative of Five Star enterprises, what would be your feedback in support of harmonisation? (5 Marks)

2. In your opinion, what were the challenges faced by Five Star enterprises while preparing their

annual report and explain how it can be avoided in future? (5 Marks)

Your answer should be around 400 words for each question.