In principle, this is a fantastic idea. One set of accounting standards will allow all investors to understand the accounts of all listed companies wherever they are in the EU.

But it does not stop there. As the number of companies with listings in Europe and the US increases, there is a growing view that the accounts they prepare should be the same. A process of trying to coordinate the two sets of standards, FAS and IAS, is currently underway and is being described as a top-priority by both sets of standard setters.

However good an idea this is, and there is some debate on this, the result is that there is significant uncertainty over what the International Accounting Standards will be in eighteen months time. This is making it very difficult for companies seeking to comply with IAS.

In one sense, this is simply unfortunate timing. The introduction of the euro was the logical time for the European Commission to press for a single set of standards in the capital markets. But the matter is being made worse by disagreement as to how to apply the standards. For example, the application effectiveness testing under IAS39 is being interpreted in different ways by different audit firms.

The fact of the matter is that accounting standards are always changing. The transition to IAS would be much easier if there was more agreement on the interpretation of the standards. Otherwise, there is a risk that competition between audit firms will weaken the standards, leading to calls for new standards!