The European Parliament and Council of the EU have agreed new, simpler accounting requirements for the preparation of financial information. It is hoped this will result in a reduction in the administrative burden for small companies (SMEs).
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This initiative is part of the Single Market Act (SMA) of 13 April 2011, in which the European Commission set out twelve levers to re-launch the Single Market for 2012 for sustainable, smart and inclusive growth. Two of the key actions identified were the creation and development of small and micro enterprises, by introducing smart regulation and cutting red tape and the creation of an eco-system conducive to the development of social entrepreneurship.
This Directive is intended to create a safer harbour in which small companies will be protected against obligations to produce onerous information in their financial statements. Such protection will mainly be relevant to the notes and statements to be prepared. Simplification will vary between small companies depending on their size and on the jurisdiction in which they are located.
Commissioner Michel Barnier has welcomed the agreement, saying “it is an important step in fulfilling our objectives for more responsible businesses. It follows up on commitments agreed under the Single Market Act I with the aim of fostering a sustainable and inclusive growth model. The agreement on disclosure requirements is also in line with the commitments made at G8 level in May 2011 under President Barroso’s leadership where the Commission has been a strong advocate for the Extractive Industry Transparency Initiative (EITI).”
Further information, EC accounting website
