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Accounting standards : a tool for the European strategic autonomy

The concept of “European sovereignty” is often discussed without shedding much light on its concrete meaning. Accounting standard setting is a good example of where Europe could develop a shared strategic vision. For many years, Europeans portrayed themselves as the good performers of multilateral regulation. They were proponents of international accounting standards and diligently implemented the idea of convergence in the single market. With multilateralism taking a step back in the context of increased tensions between China and the United States, Europe finds itself isolated in its way of advocating the benefits of and implementing international accounting standards. Has a Europe at the forefront of a well-regulated economy been naïve? Contrary to other world powers, Europe has chosen to largely delegate its sovereignty over accounting standards. We are advocating here for a change of strategy.
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Accounting standards are at the heart of the financial system, since they shape how companies are represented, their strategies, their interactions with stakeholders and their growth trajectories. Accounting standards are not neutral. They influence the economy and weight in on how we set direction for the future, such as long-term investment or research and development spending. 
For Europe to cease being naïve and to recover a sovereignty it has largely renounced to, it must adopt tools that are inexpensive, easy to implement and will allow to defend its own interests in a world where the future is characterized by a high level of uncertainty.  In order to contribute to such new strategy, we recommend three concrete measures, at the legal and institutional level; they will contribute to ensuring the right decisions are made for Europe to facilitate long term investment as well as European autonomy and resilience. First, we are proposing to provide the European Commission with the legal tools to reject or amend parts or all of an accounting standard should its fundamental interests be at stake. We are also suggesting amplifying the financial and intellectual resources of the European bodies doing the ground technical work to support the Commission, by creating a European Agency. Finally, we are recommending clarifying the European public good criteria that is used in the endorsement process. IFRS standards should be adopted only if they do not contradict the fundamental European public policy objectives, such as the ecological transition and addressing climate change.
Reappropriating sovereign powers over the governance of accounting standards setting is not simply the waking up of a continent in search of pride and sovereignty. It is essentially a pragmatic approach to respond to the major challenges and the very interests of current and future generations. 

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