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Introduction
Member-States of the European Union established several directives aimed at the harmonization of its accounting regulations and principles that must be followed by every firm in the countries. However, there are several uncertainties as to this unified system of accounting. The following paper is intended to discuss what obstacles the EU accounting harmonization model currently faces and what are the possibilities of its positive outcomes.
Obstacles to the EU Harmonization Effect
To begin with, it is necessary to state that the implementation of the innovative accounting harmonization model in all Member-States of the EU might fail due to different practices used in each country (Pontoppidan & Brusca, 2016). To make the recent legal adjustments efficient, a tremendous amount of work must be done to use the system with all its benefits and intentions. “Different practices produce significant adjustments between the surplus/deficit measures (working balance, WB) calculated at micro-level by Member States following different accounting models” (Sforza & Cimini, 2017, p. 49). Another essential obstacle that must be considered is the leak of data that is possible when all the bases will be reorganized or even replaced according to the new directives. Moreover, such programs always have an adverse impact on the sustainability of some information that can be removed by accident.
Also, the EU harmonization effect can be negatively influenced by uneducated workers. When a new system is provided, it has to be studied by people who will be capable of managing it in the future (Wang, 2014). Therefore, this shift might lead to additional investments required to attract new specialists or educate experienced accountants (Pontoppidan & Brusca, 2016). The last obstacle is presented by limitations of some firms that might not have enough financial means or other resources to adhere to the established directive.
Indicators of Success
Indeed, the new regulations that lead to the harmonization of accounting operations in all the EU Member-States have a wide range of positive implications that are supposed to improve the security of the stored data and different editing processes that are common in this industry (Dabbicco, 2015). Hence, the first success indicator in the new platform is that it will connect all the necessary documents and organize them appropriately so that accountants could have a complementary infrastructure of all the papers and information they work with regularly.
Another benefit of the system is that it will reduce the gap between macro and micro accounting (Pontoppidan & Brusca, 2016). Unfortunately, this gap requires much investment and time to operate different processes. In turn, if the two dimensions are merged, professional accountants will not need to take extra actions to access particular files anymore (Rossi, Cohen, Caperchione, & Brusca, 2016). Moreover, it will also be beneficial for quick and efficient transportation of particular data all over the European Union. Users from different countries will have an ability to share necessary data with their colleagues from other Member-States (Oulasvirta & Bailey, 2016). Although there are many methods to do it now, they are not as secure and relevant as those of what is prescribed in the harmonization directive.
Conclusion
The EU government established a directive that requires every all the Member-States to participate in its accounting harmonization program. There are many advantages and disadvantages to it at the present moment. However, there are no relevant studies or evidence-based research made to prove or refute the new system’s efficiency.
References
Dabbicco, G. (2015). The impact of accrual-based public accounting harmonization on EU macroeconomic surveillance and governments’ policy decision-making. International Journal of Public Administration, 38(4), 253-267.
Oulasvirta, L. O., & Bailey, S. J. (2016). Evolution of EU public sector financial accounting standardisation: Critical events that opened the window for attempted policy change. Journal of European Integration, 38(6), 653-669.
Pontoppidan, C. A., & Brusca, I. (2016). The first steps towards harmonizing public sector accounting for European Union member states: Strategies and perspectives. Public Money & Management, 36(3), 181-188.
Rossi, F. M., Cohen, S., Caperchione, E., & Brusca, I. (2016). Harmonizing public sector accounting in Europe: Thinking out of the box. Public Money & Management, 36(3), 189-196.
Sforza, V., & Cimini, R. (2017). Running the obstacle race towards public accounting harmonization in EU-28: A temporal study. International Journal of Business and Management, 12(3), 49-61.
Wang, C. (2014). Accounting standards harmonization and financial statement comparability: Evidence from transnational information transfer. Journal of Accounting Research, 52(4), 955-992.
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