European Union and International Reporting Standards Analysis

This report examines the European Union's (EU) role as a supranational body in the convergence of international accounting standards. It highlights the EU's establishment through the Maastricht Treaty and its influence on financial reporting across its member states. The report discusses the EU's key financial institutions, including the European Central Bank (ECB), European Investment Bank (EIB), and European Investment Fund, and how they facilitate the implementation of International Financial Reporting Standards (IFRS). It emphasizes the importance of IFRS in promoting economic cooperation, transparency, and comparability of financial information. The report also explores how the adoption of IFRS benefits investors, facilitates financial analysis, and supports statutory bodies in revenue collection. It concludes that the EU's adoption of universal accounting standards has improved financial reporting, increased transparency, and enhanced economic performance within the region.

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EUROPEAN UNION AND REPORTING STANDARDS
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European Union and International Reporting Standards
Introduction
Supranational body is an international union or group in which the influence or power of a
member country transcend national borders. World Trade Organization (WTO) and the European
Union are both Supranational bodies. In a bid to increase transparency and increase the level of
accountability, most supranational institutions come up with ways to report and audit financial
information. International audit standards (IAS) and International Financial Reporting Standards
are the two standards recognized internationally for auditing and financial reporting respectively
(Gilbert, 2011). The information symmetry ensures that states can compare performance and the
entire economy can have a consolidated report for all its states. This assignment involves
evaluating the role that European Union plays as a supranational body in the process of
international accounting convergence regarding the prescribed procedures and establishments it
has in place.
European Union
The EU is a supranational body that controls 28 States in Europe created in 1993 through the
Maastricht Treaty. The EU has made a lot of progress through integration including the
introduction of a common currency for a member state (Brown, 2011). The result is a strong
economy and economic cooperation between the various states has resulted in a stable economy.
European Union’s Institutions and International Accounting Standards
The European Union is characterized by three main financial institutions which include: the
European Central Bank (ECB), European Investment Bank (EIB) and the European Investment
Fund (Duguleana, 2016). The institutions are responsible for the policy making as well as the
control of the economy in the region. For the creation of an internal market, harmonization of

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requirements of company law is very important. In the wake of the unionization of European
states, the convergence of accounting and auditing standards used by the different countries is
very important. The standards were introduced to European Union states by the European Union
in 2002 (Husereau, 2013). It became mandatory for all European companies trading in regulated
markets in Europe to adopt the International Financial Reporting Standards in financial statement
consolidation by 2005.
Through its main financial institutions, the European Union-states have successfully
implemented IFRS standards which have resulted in greater economic cooperation. Having the
same similar standards, companies trading in all exchange markets can be compared objectively
making the security market more transparent (Gilbert, 2011). Having the same accounting
standard means that performance in the European Union can be analyzed objectively and the
reliable conclusion drawn on the performance of the entire economy.
In the wake of technology, investors from any point of the globe are investing in far markets.
With the same accounting standards means that any investor from any point of the globe can
analyze the performance in various security markets internationally and invest (Brown, 2011). In
a season of financial instability, IFRS provides a great base for financial analysis and
intervention where a crisis loom.
In a consolidated economy, legal requirements for the various states are always set by the
supranational organization. The legal requirements include taxes and other statutory deduction.
In order for the supranational body to charge the deductions objectively, a universal accounting
system should be used (Duguleana, 2016). IAS and IFRS have therefore formed objective

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standards for reporting for statutory bodies responsible for revenue collection. This ensures firms
in the same level are subjected to the same statutory requirements.
Conclusion
The adoption of universal accounting standards is important for any company. The standards
enable firms to compare performance as well as analyze opportunities like mergers and
acquisitions. The European Union through the creation of institutions responsible for
implementation and setting up of procedures has successfully adopted the accounting and
auditing standards. The adoption has not only improved the financial reports for the various
states but the reports for the entire region as well. The standards have also increased transparency
and accountability in the financial sector leading to better performance in the economy.

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References
Brown, P. (2011). International Financial Reporting Standards: what are the benefits?
Accounting
and business research. 41(3), 269-285.
Duguleana, L. a. (2016). Structural Aspects of the European Union Economy. European
Research Studies. 19(1), 93.
Gilbert, D. R. (2011). Accountability in a global economy: The emergence of international
accounting standards. Business Ethics Quarterly. 21(1), 23-44.
Husereau, D. D. (2013). Consolidated health economic evaluation reporting standards
Statement. Cost Effectiveness and Resource Allocation. Cost Effectiveness and, 11(1), p.6.,
11(1), 6.