In measuring harmonisation, prior research has focused almost exclusively on the country of domicile of the firm in quantifying differences in financial reporting practices. However, this approach offers little by way of explanation of the impact of the harmonisation process, particularly as different financial reporting treatments may be attributable to the specific characteristics of the firms that are selected for analysis. The main aim of the present study is to address this issue and to measure de facto accounting harmonisation by taking into account firms' operating circumstances. Specifically, it seeks to assess the combined effects of each firm's country of domicile and sector of operations on its choice of accounting methods, together with the firm's size and international exposure, and any changes in these factors through time. In addition, it assesses the impact of sector diversifications on accounting policy choice. This research sets out the results of a statistical analysis of financial reporting harmonisation, obtained by employing a logistic regression to predict the odds of using alternative accounting methods. The policies studied concern inventory, depreciation and goodwill. The empirical results suggest that country of domicile and sector of operations are each significant determinants of the choice of accounting method across the European Union. However, country differences still appear to be greater than sector differences, even allowing for differences between countries in industrial structure, which is inconsistent with harmonized accounting. In addition, international listing and firm size appear to be significant variables. Indeed, there has been little significant change in policy choices through time amongst European firms. This leads to the conclusion that, rather than a process of convergence, a combination of structural factors at the finn level that demand different accounting treatments and barriers to han-nonisation at the country level that restrict choice are the likely causes of persistent international differences in accounting. Prior research that attempts to measure harnionisation on the basis of convergence towards uniformity without allowing for the use of different accounting methods in different circumstances is entirely misinformed. Indeed, comparability between financial statements requires that the reported results reflect the different circumstances in which firms operate, and the harmonisation metric must take this into account.