Members of European Parliament this week are calling for a possible overhaul of international accounting standards used by European companies and banks.

At issue is the International Financial Reporting Standards (IFRS), adopted by the European Union in 2005, with the goal of having one global set of accounting standards for listed companies. The International Accounting Standards Board (IASB) is responsible for formulating the regulations.

Critics say the standards have become overly complex and opaque, and failed to raise flags for auditors before the 2008 financial collapse. And while the United States helped formulate IFRS, the U.S. has made no progress on implementing the standards and shows no sign of doing so anytime soon. In fact, a U.S. Securities and Exchange official recently cited “change fatigue” of users as a barrier to IFRS implementation there.

MEP Syed Kamall is proposing to change the way IASB and the European Financial Reporting Advisory Group – the group charged with representing European interests in the development of IFRS – are funded in the 2014-2020 budget. That proposal, to co-fund the agencies with 60 million euros, would trigger a review not only of both groups, but also of the standards themselves.

During a discussion this week in Brussels on the future of IFRS, Kamall said he believes not enough prudence has been exercised in the standards.

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“We need to discuss what we are trying to achieve with accounts,” said Kamall, shadow rapporteur for the proposal. “The European accounting model, which has developed over several centuries, is about far more than simply providing information to the capital markets – unlike the U.S. model – it is also meant to be a driver of better governance. The G20 commitment is to strengthen the global financial system. We have to ask ourselves whether converging around complex, wordy accounting standards is something that will protect us from future crises.”

Other criticisms include charges that the IASB is too influenced by accounting professionals, and that EFRAG, the group charged with representing the EU in the development of IFRS, is not pushing the European perspective enough. Some said the drive toward unifying with the U.S. has led to a loss of prudence, a firm tenet of the European accounting tradition. Officials also noted that the lack of the adoption of global accounting standards has become a point of contention in talks for the EU-U.S. free trade agreement.

“The debate clearly showed that there are a certain number of issues linked to the conceptual framework of the IASB, such as the issues of prudence, reliability and stewardship, which are being questioned by several stakeholders and need to be included in the forthcoming consultation of the IASB,” said Richard Martin, head of corporate reporting for the Association of Chartered Certified Accountants (ACCA).  ACCA, which organized the debate, believes the goal of global standards still holds merit, Martin said.

The recent crisis and failings of banks' financial statements have “tainted” the debate over IFRS, Martin added.

Francoise Flores, chairman of EFRAG, added a note of caution to the discussion, urging the group not to fix “what is not broken.” Flores said any changes in the second decade of IFRS should be well justified, with any fundamental shifts thoroughly debated first. That is especially true for contentious items like prudence or fair value measurement, she said.

“There is general agreement that IFRS have contributed to improving the quality of financial reporting in Europe,” Flores said. Moving forward, EFRAG and other standards setters would like to see the IASB “field test” potential new requirements to determine whether the cost of implementation is reasonable and the results are effective and consistent. Flores also called for more extensive education on the standards, rather than assuming users are up to speed.

An overarching requirement that any IFRS amendments “bring improvement” is not workable, Flores said, because it is too subjective. Transparency, cost and whether users can understand the information are better benchmarks, she said.

MEP Theodor Dumitru Stolojan said his task as rapporteur on the co-funding proposal will not be an easy one. The debate “shows the difficulty to reach the right balance between the necessity to preserve the independence of the accounting standard setter while at the same time trying to strengthen the influence of the EU voice,” Stolojan said.

Members of parliament are expected to pass a recommendation this week urging the European Commission to review the accounting standards. But Stolojan questioned whether parliament would be better served by waiting until November, when recommendations are expected from Special Adviser Philippe Maystadt. Maystadt, former president of the European Investment Bank, was tapped by Internal Market and Services Commissioner Michel Barnier to conduct a detailed review of the IASB and IFRS.

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