The current state of accounting harmonization: impediments to and benefits from harmonization

Although the EU has made progress towards harmonization of accounting law, this cannot hide the fact that the harmonization of the financial accounting information across Europe, through the accounting directives did not reach the intended level of comparability and transparency. Through the adoption of IFRS a higher level of harmonization has been pursued. Up to the present, the implementation of IFRS in many European countries is only required for the consolidated statement of listed companies. To this day, numerous studies have focused on harmonization and convergence of financial accounting information in Europe, addressing impediments to convergence and providing the level of adoption of IFRS in the consolidated statements of listed European companies. However, less attention has been paid to the impact of implementing IFRS in the consolidated accounts of listed companies on the statutory accounting of listed and non-listed companies. In this paper, the pros and cons of complete harmonization, i.e. the implementation of IFRS for the statutory accounts is discussed. In the last part, an illustrative case study compares the position taken by the IASB and the related treatments in Belgian GAAP and the fourth directive. Whether national GAAP is to converge towards IFRS, or IFRS will become mandatory for statutory accounts, it is important to highlight the particular differences between both sets of standards. Although we worked on a spot basis, as we only have treated the differences concerning tangible and intangible assets, this gives a good example of the particular harmonization difficulties most European countries will have to cope with.