Towards greater convergence in the EU. ‘There has been increasing support for a single set of global accounting standards in the European Union. The European Commission supports the drive for better communication and transparent information. However, its attempts go beyond the adoption of just IFRS. Work is also in progress on company law, auditing, corporate governance and reporting, prospectuses for raising capital, etc . . . In terms of accounting standards, the objective could be achieved by the global adoption of International Financial Reporting Standards (IFRS) or by convergence between national standards and IFRS. IFRS users and non-users strongly agree that the introduction of IFRS will help create a more favourable capital market environment for European companies.’

Required:

Comment on the above statement with reference to the following questions:

(a) Will IFRS help establish a pan-European equity and debt market?

(b) Would such a market bring benefits to Europe?

(c) Does conversion to IFRS affect the way shareholders and analysts view company performance?

(d) To what extent does the success or failure of IFRS adoption by European publicly traded companies affect the harmonized auditing standards and global corporate governance rules within the EU?

(e) What one piece of advice would you give to the IASB as it develops IFRS?