The political economy of fair value reporting and the governance of the standards-setting process: Critical issues and pitfalls from a continental European union perspective

Accounting is not simply a metric; it is, rather, a calculative practice that shapes the socio-economic environment. To look at the substance of accounting standards alone is therefore sometimes inadequate.From a Continental European Union perspective, this paper provides a general framework that deals with the potential changes in society produced by financial reporting. More specifically, it discusses fair value reporting from two points of view that are closely linked. The first relates to the political economy of fair value reporting and its potential impact on the economic and social system, while the second relates to the governance of the standards-setting process.In discussing such issues, this paper suggests that the fundamental principles set out by the Lisbon Treaty should be used as a framework to analyze financial reporting policies in the European Union.