The IASs have recently undergone unprecedented change. In 1987, IASC began its Comparability/Improvements Project (the Project). The Project's objective was to reduce or eliminate existing alternative accounting treatments and to make other improvements to international standards. As a result of the project, approximately one-third of the IASs were revised. The revisions became effective for accounting periods beginning on or after January 1, 1995. Table 1 lists the 29 standards that existed prior to the recent revisions and identifies the 10 that changed. Unlike FASB pronouncements, IASC does not assign new numbers when revising standards. The most significant change in the revised IASs is the committee's specification of "benchmark treatment" and "allowed alternative treatment" whenever a choice TABULAR DATA FOR TABLE 1 OMITTED TABULAR DATA FOR TABLE 2 OMITTED! of accounting methods is permitted. Prior to the Project, the IASs did not specify any preference. This specification of preferences by the committee may prove to be a practical way of eventually eliminating some of the allowed alternatives.

Table 2 shows the major changes made, indicating both benchmark and alternative treatment with a comparison to U.S. GAAP.

An Important Step Toward Harmonization

The internationalization effort to harmonize accounting standards has been fundamentally a three-step process. First, accounting methods by country were documented. In the second step, international standards were developed that gave broad flexibility by allowing the most widely used methods. The third, and most important, step is the gradual elimination of alternative treatments. IASC should be commended for moving aggressively toward this third step. Its "benchmark" recommendations are clearly intended to enhance the comparability of financial statements used in the global marketplace.

Lawrence R. Hudack, PhD, CPA, is an associate professor of accounting at Indiana University of Pennsylvania. Brian C. McAllister, MBA, CPA, is an assistant professor of accounting, and Larry L. Orsini, MBA, CPA, a professor of accounting, both at St. Bonaventure University.