A European View on the Legitimacy of Accounting Procedures: Towards a Deliberative-Accountability Framework for Analysis
Posted: 31 Jul 2008 Last revised: 31 Aug 2009
Date Written: July 1, 2008
Accounting rules affect fundamental areas of social interaction encompassing interest groups that have diverse and conflicting interests regarding financial reporting. In the absence of a coherent social choice theory, concepts of legitimacy can be used to assess the acceptance of accounting standard-setting processes and their resulting norms. In this paper, we analyze the standard-setting process in Europe. Accounting rules in Europe are developed in a two-stage procedure in which private standard-setting is combined with public rule-making. From a structural perspective, the European Union (EU) is well positioned to develop legitimate accounting procedures. However, the original purpose and the ensuing legitimacy of its control mechanism are jeopardized when EU structures are (ab-)used for policy formation and the creation of EU-IFRS.
Keywords: accounting standard-setting, legitimacy, IASB, EU-endorsement
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