Implementation of Supra-National Policies: Lessons From the Nordic Countries' Experiences of European Directives

Summary

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The article analyses the process of implementation of the Accounting Directives in the Nordic countries as a case study of supra-national regulation. The experiences in the Nordic countries are documented for an English-speaking readership based on the drafts of the legislation, commentaries by the implementing committees and interviews with individuals involved in the process. The article concludes that, in the current economic and political climate, the European Union has apparently drawn on the experience of implementing the original directives with its new model for regulating accounting change introduced with the IAS Regulation of 2002.

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Implementation of Supra-National Policies: Lessons From the Nordic Countries' Experiences of European Directives

Introduction

During the final quarter of the twentieth century, harmonization of financial reporting between countries in the European Union (EU) was dominated by the European Directives on Company Law that had to be implemented in member states' national legislation. This article aims to demonstrate how cumbersome that form of supra-national legislation was and how it carried the risk of undermining the very harmonization it sought to promote. The increase in the number of EU member states has added a further level of complexity to this mechanism of regulation. The system of endorsing and requiring the use of International Financial Reporting Standards (IFRS) offers some simplification, insofar as changes to national laws are no longer required.

The process of negotiating and agreeing Directives has been explored in some detail in the literature (for example, Diggle & Nobes, 1994; Evans & Nobes, 1998a,b). The process of implementing the Dhectives in respect to certain topics (for example, the true and fair view [Nobes, 1993; Aisbitt & Nobes, 2001], auditing [Cooper et al., 19%; Loft & Jeppesen, 2001] or constituent lobbying in the implementation process [McLeay et al., 2000] has also been considered. This article contributes to the literature by examining the processes for a wider range of topics and by making non-English language sources available to a wider audience.

Many (for example, Hofstede, 1984) regard the Nordic countries (Denmark, Finland, Norway and Sweden) as being a cultural group discrete from others in continental Europe. These countries provide examples of implementing the Fourth and Seventh Directives on Company Law (the Accounting Directives) at different dates and under different circumstances Denmark had some involvement in the drafting of the Directives and was the first Member State to implement the Fourth Directive in its national law. Sweden and Finland joined the EU later and Norway became a member of the European Economic Area, and was therefore also obhged to implement the Dhectives These three countries implemented the Directives in the 1990s,1 some time after they had been agreed and without the benefit of any involvement in their formulation.

One way to examine the development of regulation is to measure lobbying activity and success during the regulatory process (with regard to the implementation of the Fourth Directive in Germany, see for example, McLeay et al., 2000). However, lobbying is often "invi...

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