The Role of the European Commission in the Harmonization of Accounting Standards: Challenges and Recommendations for the EU Countries

Abstract

The article examines the influence of the European Commission on the development and harmonisation of accounting standards in the European Union. The key initiatives of the Commission are analysed, in particular, the implementation of International Financial Reporting Standards (IFRS) and the establishment of the European Financial Reporting Advisory Group (EFRAG). The benefits and challenges associated with these measures are discussed, as well as their impact on the quality and comparability of financial statements of European companies. The purpose of this article is to provide a comprehensive analysis of the role of the European Commission in the development and harmonisation of accounting standards within the European Union. The researchmethodology includes a systematic literature review with analysis of scientific publications, official EU documents and reports of professional organisations, which allowed to form the theoretical basis for the study. A comparative analysis of accounting standards and practices before and after the implementation of the European Commission's initiatives allowed us to study their impact on the development of financial reporting. A case study of specific cases of regulatory changes' impact on the financial statements of European companies provided a deeper understanding of the consequences of the new standards. A qualitative content analysis of official statements, press releases and other documents of the European Commission allowed us to understand its position and strategies in the field of accounting. Expert interviews with accounting professionals, regulators and business representatives provided insider perspectives and additional data for analysis. Statistical analysis of quantitative data on the implementation of IFRS and its impact on the financial performance of companies reinforced the conclusions of the study. Based on the analysis, recommendations for further improvement of the European Commission's regulatory policy in the field of accounting are proposed to enhance transparency, increase investor confidence and promote sustainable economic development in the EU. The article concludes that the European Commission's initiatives, in particular the introduction of IFRS and the creation of EFRAG, have significantly contributed to the harmonisation of accounting standards in the EU, increasing the comparability of financial statements of companies from different member states. This article describes the positive impact of these measures on the quality of financial information and the transparency of capital markets in the EU, which has led to increased investor confidence and facilitated cross-border investment. However, the article also describes certain challenges, in particular, the difficulties of adapting small and medium-sized enterprises to IFRS and the need to take into account the specifics of national economies when developing common standards. Recommendations for further improvement of the regulatory policy are offered, including strengthening of business feedback mechanisms, development of specialised standards for SMEs and integration of sustainable development issues into financial statements. The author emphasises the need for further development of EFRAG as a key instrument for ensuring European interests in the global accounting standardisation process. The article concludes that the European Commission plays a critical role in shaping the future of accounting in the EU and the need to continue an active policy in this area to maintain the competitiveness of European businesses in the global market.