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Survey of accounting for intangibles by SMEs

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13 Oct 2020

The European Federation of Accountants and Auditors for SMEs (EFAA) has published the results of a survey that examined the extent of harmonisation of the accounting for intangibles by SMEs across Europe.

Intangible assets are often, and increasingly, the primary drivers of the value of a company. While there is significant European Union regulation governing how publicly accountable companies report intangible assets in their financial statements, the accounting directive has no explicit regulations for SME companies except for the accounting for goodwill. Therefore, EFAA carried out a study to gain insights into the accounting treatment of intangible assets across jurisdiction of EFAA member bodies.

The objectives of the study were: 

  • To determine the applicable regulatory framework for accounting for intangible assets in each jurisdiction;
  • to compare these frameworks;
  • to establish whether there are incentives that influence the acquisition and valuation of intangible assets; and
  • to inform the current debate on intangible assets in Europe.

Not surprisingly, the study revealed that there are significant variations between jurisdictions in Europe when it comes to the accounting treatment of intangibles by SMEs and, consequently, users of SME financial statements need to be alert to the lack of comparability of information on intangibles.

Please click to access The Financial Reporting of Intangibles by SMEs in Europe on the EFAA website.

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