In a letter to the European Commission (EC), the ICAEW has supported its decision to spend more time reviewing the Accounting Directives.
Dr Nigel Sleigh-Johnson, Head of the ICAEW Financial Reporting Faculty, has said that an exhaustive consultation is required to create a simplified financial reporting regime that truly helps SMEs and that the future framework must be principles-based to work for all Member States.
The European Commission has recently announced that it will take more time to review the Accounting Directives 'to allow it to carry out consultations on this IFRS [for SMEs] and, more generally, on specific needs of EU financial reporting', meaning that the legislative proposals for the future EU accounting framework will not be published this year, as originally scheduled.
Dr Nigel Sleigh-Johnson, Head of the ICAEW Financial Reporting Faculty, said:
"Simplifying the EU accounting requirements and getting the new framework right for the many EU small businesses, in particular, is a major undertaking and one that requires exhaustive consultation with all relevant stakeholders to get it right.
"Rushing the review is not likely to lead to a high quality end product. We therefore welcome the decision by the EC to consult further."
In its letter, the ICAEW also highlighted its views on some of the key issues in relation to financial reporting requirements in the EU. It argued that the revised EU framework should be principles-based and reflect the needs of those using private businesses' financial reports.
"We see a 'bottom-up' approach, where the initial focus is on the requirements of smaller businesses rather than on the larger end, as the best way forward," said Sleigh-Johnson.
He also argued that the new Accounting Directives must be compatible with IFRS for SMEs, the simplified set of accounting standards for non-publicly accountable companies issued in July by the International Accounting Standards Board (IASB).
"Several countries in the EU have expressed an interest in allowing certain types of company to apply the IFRS for SMEs. It is therefore critical that the EU accounting framework does not stand in the way of voluntary adoption by businesses in Member States.
"Having one set of standards used by private companies trading across national borders could be beneficial to the entire internal market," Sleigh-Johnson concluded.
The ICAEW will share its views on the IFRS for SMEs standard with the UK Financial Reporting Council and the European Commission, and will also host a major debate on the topic in London on 26 November.
View the EC announcement
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