Individual countries still hold sway over accounting standards

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In the drive towards transnational governance and accounting standards, it is commonly perceived that the authority of national actors, such as nation states and professional accountancy bodies, has been diminishing. But such thinking has been questioned by two papers co-authored by Anna Samsonova-Taddei and Chris Humphrey.

One paper looked at the role of the EU as a policymaker in auditing. Following a sustained policy campaign by the large international accounting firms, the European Commission recently issued a recommendation that EU states should limit civil liability for statutory auditors. However, the paper argues that the recommendation was far from the firms’ desired outcome because, as a non-binding policy document, it left it to individual member states to decide whether and how to limit auditors’ liability exposure.

Anna, lecturer in accounting, says the study found that such an outcome is due to the fact that national policymakers still have a lot of say in the processes of policy development as, ultimately, they are the ones in charge of the subsequent application of such recommendations.

“What we found was that there were a lot of conflicting interests and viewpoints about what the EU’s policy on auditor liability should look like. From a conceptual point of view, we could see a link between such controversy and the manner in which different national actors perceived (and were exposed to) risks associated with auditor liability. As a result, the recommendation was vague, and because it was not enforceable, it could not provide the means to change the status quo.”

Another paper looked at the impact of globalisation on the strategies pursued by the national professional accountancy bodies. Added Anna: “While in some respects these organisations have lost ground because of the rise of transnational policymaking, they have clearly extended their own borders and compensated by developing themselves into bodies with global reach, setting out to be global thought leaders.”

Chris says the two trends are feeding off each other. “Organisations are becoming increasingly global, teaming up with each other to give themselves a stronger voice. As a result we are seeing a repositioning and redefining of accountancy borders. National professional bodies remain important players on the transnational governance scene.”

He adds that there is a need for far more research in the area. “A lot of what is happening is falling under the research radar. There is a mantra that because business is global you have to have global solutions.”

http://www.emeraldinsight.com/doi/abs/10.1108/AAAJ-05-2013-1345

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