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The New Accounting Directive: A harmonised European Accounting Framework?

Date

20 Jun 2016

Sections

Euro & Finance

-       EU experts discuss the implementation of the Accounting Directive at a recent EFAA roundtable supported by ACCA in Brussels -

The Accounting Directive published on 26 June 2013, entered into force on 20 July 2013 and should have taken effect in Member States on 20 July 2015, the expiry date of the implementation period. It represents the culmination of a debate addressing the accounting acquis in Europe and incorporates within it some 100 Member State Options (MSOs).

The European Federation of Accountants and Auditors for SMEs (EFAA) conducted a survey of its member bodies in eight EU member states. It provides an insight into the likely effect of the Accounting Directive implementation, how those MSOs have been exercised and other issues that have arisen. EFAA, with the support of ACCA (the Association of Chartered Certified Accountants) chose Brussels to launch this report and initiate a lively debate on the consequences of the Accounting Directive implementation with experts.

The EFAA report shows some areas where most of the surveyed countries have implemented the Directive in a similar way, especially in establishing a reduced disclosure regime for micro entities. However, the overall picture is one of considerable variation in the use of the member state options across the different countries and one of reduced transparency of SMEs because of the decline in financial information available about them on the public record.

Bodo Richardt, EFAA President said “Harmonisation is not only needed by the global payers, but also by smaller entities, especially those investing or operating across borders and located in border regions. The deficiencies in both harmonisation and comparability that the EFAA survey illustrates seem likely to provide impediments to SME development”.

“Common standards are essential. Comparability is very important, both for the completion of the Capital Markets Union programme, envisaging a comparable financial reporting system for SMEs on alternative markets and also as a common information base for credit applications, and for consumer protection purposes”, Bodo Richardt added.

Marie Lang, co-author of the report, and Director of Professional Development at EFAA said “The debate revealed that accounting by SMEs across Europe is going to be little harmonised, and that the initial aim of the Directive was unlikely to have been met. There is no escape from the fact that users looking at the accounts of companies across Europe will have to exercise considerable care in reading, interpreting and comparing the information they contain”.

Richard Martin, co-author of the report, Chair of the EFAA Accounting Expert Group and Head of Corporate Reporting at ACCA explained: “It should not be forgotten that the Directive is silent on many accounting treatments such as for example on leases, deferred tax and pension obligations. This means that there will be further differences and lack of harmonisation”.

“Also, in the framework of EU action against tax avoidance, which is very high on the agenda, both internationally and at EU level, the forthcoming Common Consolidated Corporate Tax Base proposal may be an important component. Any common corporate tax base to help with tax avoidance or the debt/equity bias would have to start with a common accounting basis”, Richard Martin concluded.

-ends-

Notes to editors

About EFAA

For further information please contact EFAA Project Coordinator Felix Martens,
tel: +32 2 736 88 86  email: felix.martens@efaa.com

The European Federation of Accountants and Auditors for small and medium-sized enterprises (EFAA) is an umbrella organisation for national accountants and auditors' organisations whose individual members provide professional services primarily to SMEs in Europe. EFAA has 17 members throughout Europe and represents more than 360,000 accountants, auditors, and tax advisors on their behalf in Europe and beyond.

SMEs are the back bone of Europe’s economy and Small and Medium-sized Accounting, Auditing and Tax Advisor Practices (SMPs) are their most important business advisors. They help entrepreneurs gain access to finance, and they provide valued business advice allowing them to grow sustainably.

However, most accounting and auditing rules and standards are set up at the EU or international level and are often inspired by large companies and oriented towards their needs. EFAA supports Europe’s SMPs through our strategy to inform – advocate – connect. We provide our members and regulators with an evidence based small business perspective on political and regulatory innovations (inform). We advocate for the interest of Europe’s SMPs and SMEs by providing feedback to consultations and with direct dialogue with political stakeholders (advocate) and we connect our members and the professionals they work for to foster the exchange of best practices and the development of a strong SMP and SME sector in Europe (connect).

Please find more information about EFAA and our work on our website: www.efaa.com.

About ACCA

For further information: Cecile Bonino , tel: +32 (0) 2 286 11 37or cecile.bonino@accaglobal.com

ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants. It offers business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management.

ACCA supports its 178,000 members and 455,000 students in 181 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. ACCA works through a network of 95 offices and centres and more than 7,110 Approved Employers worldwide, who provide high standards of employee learning and development. Through its public interest remit, ACCA promotes appropriate regulation of accounting and conducts relevant research to ensure accountancy continues to grow in reputation and influence.

Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability. It believes that accountants bring value to economies in all stages of development and seek to develop capacity in the profession and encourage the adoption of global standards. ACCA’s core values are aligned to the needs of employers in all sectors and it ensures that through its range of qualifications, it prepares accountants for business. ACCA seeks to open up the profession to people of all backgrounds and remove artificial barriers, innovating its qualifications and delivery to meet the diverse needs of trainee professionals and their employers. More information is here: www.accaglobal.com

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