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ACCA responds to moves by the EC

13 Jul 2007

Moves by the European Commission to simplify the business environment for small businesses should not result in the sacrifice of vital information for investors, creditors and tax authorities and other stakeholders, ACCA has said.

It is concerned that proposals to exempt small businesses from the requirement to publish annual accounts and to allow some medium sized entities, which could be multi-million pound concerns, to use exemptions currently only available for small businesses will not only result in confusion and a lack of information being provided to stakeholders - but could also remove valuable protection against Value Added Tax fraud, corruption and money laundering.

ACCA believes that sound and transparent financial reporting makes a major and positive contribution to the economic health of Small and Medium-sized Enterprises (SMEs) and provides valuable information for stakeholders - and is not the appropriate place to start looking for cuts in bureaucracy for small and medium sized businesses.

While ACCA welcomes the proposal the move to make EU legislation more principle-based, it believes the main reporting burdens are created at national, not EU level. 

Allen Blewitt, ACCA chief executive said: 'There is evidence that many EU states on mainland Europe are not fully implementing the existing accounting and auditing options in the 4th and 7th Directives. I would urge the Commission to work with those member states to revisit those options, both as a means of reducing administrative burdens on SMEs and to create a level playing field across the single market.'

'Full accounts and an independent audit will often bring real economic benefits to SMEs, in terms of the help they offer to businesses when raising finance by satisfying lenders and investors and also in terms of their contribution to effective financial management. A measure of accountability in respect of their financial affairs, is, in ACCA's view, a reasonable and necessary consequence of a business enjoying the benefits and protection of limited liability,' he said. 
 
'The cost of filing accounts is minimal and is outweighed by the benefit derived by users of financial information from having them on the public record. Therefore, abolishing the filing requirement would not produce any cost or administrative savings for SMEs - they would still have to maintain accounting records and prepare full accounts sufficient to show a true and fair view; Further, we do not believe it is right that directors of companies employing 250 people should be able to opt out of a an audit process which helps to reinforce the financial, governance and regulatory responsibilities they rightly assume.'    

Allen Blewitt concluded: 'We are strongly behind the Commission's efforts to reduce red tape on SMEs. But we query whether these proposals will really result in cost reductions given that companies will still have to provide true and fair accounts for tax purposes.'  

For further information, please contact:

Colin Davis - ACCA Head of International Communications
tel:   + 44 (0) 207 059 5738
e-mail : colin.davis@accaglobal.com