Measurement of de Facto harmonization in accounting practices between selective countries in the Middle East : Jordan, Saudi Arabia, the United Arab Emirate

Abstract EN

This study has been carried out to reveal the advantages of harmonization of accounting practices in the some of the Middle East countries.

It deals with the process and the degree of accounting harmonization already taking place, and with analyzing the best options for those countries to achieve accounting harmonization.

A survey of accounting practices in Jordan, Saudi Arabia and the United Arab Emirates was conducted to check for consistency and variation in measurement methods used over the period 2000-2002.

Two statistical tools were used, the Kruskal Wallis test to assess whether the measurement practices among the three countries’ companies are significantly different, and the “raw” between country C-index to find the degree of harmonization among the three countries in order to determine whether the accounting information prepared by listed companies in the region are comparable and therefore can be used by different users to choose between different investment opportunities.

The Kruskal Wallis test indicated that there is no significant differences in the accounting practices concerning inventory valuation, amortization of goodwill, fixed assets valuation, depreciation, current investments and investments in associates among the three countries, Jordan, Saudi Arabia and the UAE.

The test also showed that the accounting practices concerning inventory costing, research and development costs and long term investments were significantly different.

The raw among the three countries C-index showed a high degree of harmonization in the accounting practices concerning inventory valuation, fixed assets and depreciation expense, and a low degree of harmonization among the three countries concerning inventory costing, amortization of goodwill, research and development costs and investments in securities.

The study noticed that both of Kruskal Wallis test and the raw C-index did not give the same conclusions concerning harmonization all the time.