Accounting Integration in Europe - Still on Track?
Queen Elizabeth spoke for many Europeans when she described 1992 as an "annus horribilis." The year was filled with political and economic developments that initially inspired great hope and optimism but later gave way to disappointment and pessimism. The fallout from 1992 is all too obvious in a seemingly endless list of problems now facing European unity. A difficult debate continues on the ratification of the Maastricht Treaty. The people of Switzerland have chosen not to join the European Economic Area (EEA), which would extend most European Community benefits to the remaining European Free Trade Agreement countries (Austria, Finland, Iceland, Liechtenstein, Norway and Sweden). EC countries are unable to respond adequately to the terrible events taking place right on their doorstep in the former Yugoslavia. It has not yet been possible to find a compromise that would save the Uruguay Round of trade talks on the General Agreement on Tariffs and Trade (GATT), even though success would promote increased world trade and help Europe out of a recession. Understandably, these uncertainties about the future have led to upheavals in European currency markets and made one of the most severe recessions in recent times even more difficult. This in turn has dampened enthusiasm for the freer competition that a single market implies. OPTIMISM FOR THE PROFESSION Last year was difficult for the accounting profession, too. The economic downturn had an impact on the demand for accounting services and criticism of the profession's performance increased. In spite of the political and economic uncertainties now prevailing, the Federation Experts Comptables Europeens (FEE) is optimistic about the future. As the representative organization for the accountancy profession in Europe, bringing together 33 bodies from 22 countries with a combined membership of approximately 300,000 individuals, FEE recognizes the solid consensus and achievements that are the keys to Europe's prospects for unity. The Treaty of Rome and the Single European Act are still in place, the ability of the EC Court of Justice to make further progress through its decisions remains unchanged, the EC continues make progress toward achieving ambitious single-market targets and the outcome of a summit meeting of EC leaders held in Edinburgh in December 1992 indicates solutions can be found for many of the problems raised by Maastricht. Despite the absence of Switzerland, plans are proceeding for the creation of the EEA, new applications for EC membership are being considered, and the reconstruction of Central and Eastern European economies draws heavily on EC resources and models. In short, there is no doubt the process of European integration will continue and more progress will be made in completing the single market. What is uncertain are the nature and speed of the developments and the roles and contributions of the various players involved. WHAT THE SINGLE MARKET MEANS TO ACCOUNTANTS European integration is of interest to the accounting profession not only because of the effect it will have on demand for accounting services, but also because of its influence on the way the profession in Europe is structured and regulated. For accountants, freedom to establish a presence and provide services on a crossborder basis and mutual recognition of qualifications (for both individuals and firms) have been rights enshrined in the Treaty of Rome since 1957. However, barriers created by the complexity of 12 different sets of national regulations on providing professional services require detailed EC legislation to make the Treaty of Rome principles operative. American CPAS should keep in mind there, is no such thing as a "European accountant." A tremendous range and diversity exist in European countries regarding the types of accounting services regulated; the scope of practice, education and training permitted; the legal forms allowed for the exercise of the profession; and ethical requirements. …