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Financial statements are one of the fundamental methods in which information is provided about the company, its shareholders, potential investors and other stakeholders. The loss of credibility of these reports resulted from the collapse of several large companies and expanded, through the process of globalization, across national borders and became an international problem. Research has shown that misleading financial reporting is always the result of a combined effect of bad business, management and financial reporting. Since financial reporting is a national but also an international issue, in order to protect investors, a number of studies have been launched at both levels to identify the main causes of the loss of credibility of the reporting and take steps towards its raising. Although the reporting framework in which companies operate is primarily national, international steps are necessary to ensure harmonization in financial reporting. Although as a result of discussions about diversity in accounting and auditing, there are already extensive studies, research works and numerous official bodies that address these issues, both national and international, that fact do not cease the need to continue to explore ways to achieve greater harmonization in standards and principles relevant for financial reporting, which include both accounting standards and principles and financial reporting standards. The advantages of harmonizing these principles have long been known, and in the first place involve the possibility of investing beyond national borders, which would exclude the necessary revisions of financial reports according to the standards of the other country in which they want to invest. The major global harmonization in accounting exists in the harmonization between US GAAP and IFRS (International Financial Reporting Standards). Great progress has already been achieved in the harmonization of the principles, primarily in the domain of Mergers and Acquisitions (M&A). Although the differences between these two concepts are extensive, primarily in the methodology itself and the nature of the principles, one of the main ten differences, and also the main stumbling block in harmonization, belongs to the category of inventories. Many of the IFRS principles have been adopted or mitigated in GAAP, but the fact that the LIFO inventory management method is permitted in GAAP, but not in the IFRS, remains one of the main issues of harmonization. The work of the authors wants to present the LIFO method, once again, as a good alternative to inventory management, which should be reviewed in IFRS, since the IFRS principles are prepared exclusively for stable or deflating economies, which is often not the case in view of the financial crisis. The paper includes a comparative analysis of the main allowed methods of inventory management and the LIFO method, from the aspect of financial result, the amount of the inventory end-value, the profit tax and the main financial indicators in the conditions of inflation. The main results of the analysis explain the reasons for defending the application of the LIFO method in inflationary conditions, and consider that the global accounting principles, which are the ultimate goal of general 232 R&B College, Belgrade, Serbia 233 R&B College, Belgrade, Serbia Conference Proceedings: 2 International Scientific Conference ITEMA 2018 580 harmonization, include this method as permitted, since, as the research intends to show, it corresponds more to the inflationary conditions.

GLOBAL DIVERSITIES IN FINANCIAL REPORTING: COMPARATIVE ANALYSIS OF INVENTORY VALUATION METHODS IN RELATION TO US GAAP AND IFRS