EU is concerned about IASB SME proposal

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14 Sep 2007

In a presentation on Simplification of the Business Environment for Companies Charlie McCreevy, the European Commissioner for Internal Market and Services, expressed concern about whether the IASB's Proposed IFRS for SMEs is "simple enough to be applicable for the bulk of SMEs in the EU".

The relevant excerpt from Mr McCreevy's remarks is below.

In the field of accounting and auditing, the focus of the simplification plans lies on the possibilities of reducing costs for SMEs. The existing requirements entail administrative work which companies, and particularly small and medium-sized ones, often find unnecessarily burdensome. This has to improve.

The International Accounting Standards Board (IASB) has recently developed a draft accounting regime for SMEs. We have repeatedly emphasised that accounting for SMEs must be simple and reflect the nature of the business of small companies. The feedback we have received from Member States, the European Parliament and stakeholders is that the current IASB draft is not simple enough to be applicable for the bulk of SMEs in the EU. At this stage, therefore, I do not intend to propose that the IASB draft be endorsed for application in the EU.

Could Member States, nonetheless, allow their SMEs to apply the IASB draft standard? The starting point, in EU law, is that Member States have to follow the Accounting directives (the so-called 4th and 7th directives). It is not clear that the current IASB draft is in line with the existing EU accounting directives. Since there seems, at present, to be very little support from Member States and the European Parliament for the IASB draft, the Commission has no plans to propose changes, either to the existing Directives or to the IAS Regulation. If there are Member States and other interested parties who want to allow application of the IASB draft, then I would like to hear from them.

Click to view Simplification of the Business Environment for Companies (PDF 73k).

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