Private Firm Accounting in the EU: Still an Incomplete and Fragmented Picture

The study has the aim to examine the current state of private firm accounting in the EU, focusing on the implementation of Directive 2013/34/EU. While Directive 34 aimed to unify financial reporting across EU member states, its broad national discretion has resulted in substantial differences in local accounting regulations. Variations in disclosure requirements, financial statement presentation, and measurement bases persist, creating challenges in achieving comparability and transparency. The research highlights the impact of regulatory flexibility on financial reporting, with some countries maintaining conservative, creditor-oriented accounting models, while others align more closely with International Financial Reporting Standards (IFRS) principles. The study identifies three levels of harmonization: full IFRS adoption for listed firms, voluntary IFRS use for certain private firms, and a fragmented regulatory landscape for the majority of private firms. The findings suggest that while some jurisdictions—such as Denmark, the Netherlands, and the UK—permit greater alignment with IFRS, others—like Germany, France, and Italy—retain strong historical cost traditions, limiting the adoption of fair value accounting. This study underscores the need for a more structured accounting framework for private firms in the EU, balancing financial reporting flexibility with comparability and regulatory consistency. The research calls for reduced discretion at national level, clearer definitions of accounting principles, and a unified approach to financial reporting that better accommodates the diverse needs of stakeholders, including investors, creditors, and policymakers.