With a view to the European Parliament’s plenary vote, on 24 February, which could reduce paperwork for small companies, the Association of Chartered Certified Accountants (ACCA) and the European Federation of Accountants and Auditors for small and medium-sized enterprises (EFAA) sent a joint letter to MEPs, on 17 February. Underlining that they support better regulation but not a lack of transparency, the signatories say that “effective internal controls are essential for every commercial business, regardless of their size”.

OBJECT OF VOTE

On 25 February, MEPs will vote at first reading on an amendment to EU accounting rules, already approved by the Legal Affairs Committee, on 28 January (see Europolitics 3910). The draft directive (2009/0035 COD) amends the directive on annual accounts for certain types of companies (78/660/EEC) with respect to micro-companies.

Under the proposal, member states could exempt micro-companies from the obligation of publishing annual accounts. To be exempted, they would have to meet two of the following three criteria: a balance sheet total of less than €500,000, net turnover of less than €1 million and fewer than ten employees. The only obligation maintained by the European Union would be to continue keeping records of their commercial transactions and of the company’s financial situation.

CONCERNS

The latter clause is not considered sufficient by accountants, represented by the ACCA and EFAA. According to Federico Diomeda, CEO of EFAA, exempting micro-companies from publishing annual accounts would not result in savings but in “adverse consequences for cross-border comparability of performance and for standards of financial management in small companies, result in a lack of transparency and potentially have implications for the incidence of financial crime”.

A study mentioned in the Commission’s impact evaluation concludes that the measure would lead to net savings of around €1,169 for companies, but the two associations are dubitative and call for examples. “We do not consider that any net financial advantage will accrue to micro-companies if they are exempted from producing financial information for company law purposes but continue to have to produce much the same information for other purposes,” states the joint letter.

Noting that the proposal is not in the interests of companies themselves or of their stakeholders, they urge members of the European Parliament to pressure the Commission to scrap its current proposal and come back with an overarching proposal for revision of the fourth and seventh Company Law Directives (accounting directives).

The letter is available at www.europolitics.info > Search = 266622