“several Organisations Have Been Involved in the Efforts to Harmonise Accounting Practices Either Regionally or Internationally. the Most Important Players in This Effort Were the European Union (regionally) and the International Accounting Standards Co

“Several organisations have been involved in the efforts to harmonise accounting practices either regionally or internationally. The most important players in this effort were the European Union (regionally) and the International Accounting Standards Committee (IASC) (now IASB) (internationally). The International Organisation of Securities Commissions (IOSCO) and the International Federation of Accountants (IFAC) also contributed significantly to the harmonisation efforts at the international level.” (Doupnik and Perera, 2009, page 72).

Word Count:

2493

Contents:

List of Abbreviations 3

1. Introduction 4

2. The European Union and the IASC/IASB 4

2.1 A History 4

2.2 Organisational Objectives 4

3. Motives Behind Accounting Harmonisation 5

4. Accounting Harmonisation/Convergence Efforts 6

4.1. Work Done to Harmonise/Converge Accounting Practices 7

4.2. The Challenges Faced in Efforts to Harmonise Accounting Practices 8

5. Successes and Achievements of Both the EU and the IASC/IASB 9

6. Conclusion 10

7. References 11

8. Appendix: 15

List of Abbreviations

EC European Community

EU European Union

FASB Financial Accounting Standards Board

HGB Handelsgesetzbuch

IAS International Accounting Standard

IASB International Accounting Standards Board

IASC International Accounting Standards Committee

ICAZ Institute of Chartered Accountants of Zimbabwe

IFAC International Federation of Accountants

IFRIC International Financial Reporting Interpretations Committee

IPSAS International Public-Sector Accounting Standards

IOSCO International Organisation of Securities Commissions

ISA International Standards on Auditing

OECD Organization for Economic Cooperation and Development

SEC US Securities and Exchange Commission

US GAAP US Generally Accepted Accounting Principles

ZAPB Zimbabwe Accounting Practices Board

1. Introduction

The purpose of this report is to carry out a critical evaluation of the work carried out by the EU and IASC/IASB to harmonise accounting practices. The Report considers the history of both organisations and the objectives of the organisations in terms of accounting practices regionally and internationally; motives behind accounting harmonisation; the work carried out, and the challenges faced in harmonising/converging accounting practices; and focus also on the achievements of both the EU and IASC/IASB in harmonising accounting practices. It has been widely accepted that competition in regulation is not as efficient as co-operation, provided the same similar risks are addressed by similar rules (Broby, 2013).

2. The European Union and the IASC/IASB

2.1 A History

The EU was originally setup after the Second World War frequent neighbouring country wars. 1950 saw the beginning of Europe’s uniting of nations through the European Coal and Steel Community by economically and politically linking European Countries. This was the true beginning of the ambition for harmonisation across Europe (European Union website, the official EU website - European Commission, 2017).

IASC was formed in 1973 via an agreement of professional accounting bodies from multiple nations (Iasplus.com, 2017). As of March 1997, the committee had issued 33 IAS’s. IASC membership has increased greatly over the years. As of September 1999 there were 143 members from 104 countries, and developing countries increased from 6% membership to 84% (Cairns, 1990; Gernon et al., 1990).

2.2 Organisational Objectives

The Goal of the EU, originally called for by Winston Churchill, was for a ‘United States of Europe’. A Europe that guaranteed peace would defeat nationalism and war-mongering. The goal of accounting harmonisation further adds to this context. Today the EU continues efforts towards harmonising international accounting practice, “The adoption of IFRS in the European Union was designed to improve the efficiency of EU capital markets by increasing the transparency and comparability of financial statements” (European Commission, 2015).

European Parliament passed on a regulation in 2002 and required all companies listed in the EU to prepare the consolidated financial statements in accordance with IFRS from 2005. The EU aims to ensure free movement of people, goods services and capital within the internal market (European Union website, the official EU website - European Commission, 2017).

The objectives of the IASC (IASB predecessor) was to develop accounting standards to be observed when presenting audited financial statements, and to promote the world-wide acceptance of standards. International Harmonisation was the end objective (Barth, Landsman and Lang, 2008). IASB is a private body that approves and develops IFRS’s. IASB has three main objectives; convergence, improvement and harmonisation. To achieve their goal, IASB have formed ‘principle based’ standards (to reduce differences between IAS judgement), and taken steps to remove alternative accounting methods