The Degree of Harmonization of Accounting Practices Within Saudi Arabia

This study has been carried out to reveal the advantages of harmonization of accounting practices in Saudi Arabia. It deals with the process and the degree in accounting harmonization already taking place, and with analyzing the best option for Saudi Arabia to achieve accounting harmonization. A survey of accounting practices in Saudi Arabia is made of the consistency and change in measurement methods used over the period 2000-2002. Two statistical tools are used. The Chi-square test is used to assess whether the measurement practices by companies in Saudi Arabia are significantly different and the C-index is used to find the degree of harmonization within Saudi Arabia in order to determine what factors appear to have influenced comparability. The results indicated that the C-index concerning inventory valuation and costing, research and development cost, fixed assets, depreciation, and foreign currency translation is high. On the other hand, the C-index concerning amortization of goodwill, the amortization of research and development costs and accounting for investment is very low. The results also indicated that there is no significant differences in the accounting practices concerning inventory valuation and costing, goodwill, research and development costs, amortization of research and development costs, fixed assets valuation, depreciation, and investments in associates. On the other hand, the accounting practices concerning amortization of goodwill and simple investments are significantly different.