EUROPEAN UNION (EU)

The Treaty of Rome established the European Economic Community (EEC, later called the European Community) in 1957, using the goal of harmonizing the legal and economic systems of its member states. The EEC was absorbed into the European Union (EU) when it came into existence in 1993, as a result from the (1992) Maastricht Treaty. The EU now comprises 27 member countries (Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom).

In contrast to the IASB, which has no authority to call for implementation of its accounting standards, the European Commission (EC, the governing body from the EU) has full enforcement powers for its accounting directives all through the member states. One in the EU’s objectives is to obtain integration of European financial markets. Toward this end, the EC has introduced directives and undertaken key initiatives to accomplish a single market place for:

1. raising capital on an EU-wide basis
2. establishing a frequent legal framework for integrated securities and derivatives markets
3. achieving a single set of accounting standards for listed corporations

The EC embarked on a key program of provider law harmonization soon right after it was formed. EC directives now cover all aspects of firm law. Several have a direct bearing on accounting. A lot of observers take into consideration the Fourth, Seventh, and Eighth Directives to become historically and substantively by far the most critical.