Understanding the Consequences of Accounting Standards in Europe: The Role of EFRAG

Mario Abela and Araceli Mora

Accounting in Europe, 2012, vol. 9, issue 2, 147-170

Abstract: The global financial crisis has accelerated the need for standard-setters to demonstrate that they understand the effects of the accounting standards they are setting. Within a European context, the endorsement process and the ultimate adoption of new and amended International Financial Reporting Standards into European Union law demand that there is evidence to support the assertion that such standards will improve financial reporting. Our analysis is anchored in the ideology theory of regulation which provides a compelling case for effect analysis to underpin the standard-setting process. For that process to work effectively, a number of key actors need to engage in the process. Accordingly, the aim of this paper is to analyse the potential role of those actors in the standard-setter's analysis of effects. It is argued that there is a significant role for academic research to play in that process and that intermediaries, such as European Financial Reporting Advisory Group, can serve to bring research to the attention of the standard-setter. However, addressing the current disconnect between standard-setters and accounting researchers is not straightforward and we propose various strategies for how that relationship could be improved. We argue that these changes may lead to an improvement in the efficiency and effectiveness of the standard-setting process.

Date: 2012
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DOI: 10.1080/17449480.2012.720872

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