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Accountants instrumental to micro-entities simplifying their accounting

Accountants are instrumental in the decision of micro-entities to take up the option for simplified accounting, the EFAA has said.

Accountants instrumental to micro-entities simplifying their accounting
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European Federation of Accountants and Auditors for SMEs (EFAA) has published a survey report, Acceptance Of The Micro-Entities Accounting Option In Europe, which reveals that accountants are instrumental in the decision of micro-entities to take-up the option for simplified accounting.

EFAA was motivated to investigate the take-up of the micro-entities option – the extent and the reasons for promoting it or otherwise – by way of a survey of accountants in practice conducted in conjunction with its member organisations in 2017 and 2018.

The European Commission has long been committed to easing the administrative burden on small and medium-sized entities (SMEs), especially very small companies that are commonly referred to as micro-entities.

In the accounting arena, this commitment manifested itself in the European Commission’s revision of the Accounting Directives in order to make them less demanding for micro-entities. This is known as the micro-entities option or regime.

Over 700 practitioners from seven countries responded to the survey.

The key findings indicated that the level of awareness of the existence of the micro-entities option varies significantly from country to country.

It also showed that a clear majority of accountants recommended their eligible clients to take-up the micro-entities option, citing cost savings and greater privacy from reduced disclosures as their motivation.

“The survey findings have various implications for regulators, standard setters and accountants, not least the European Commission in light of the fact in early 2018 it commenced the EU fitness check on public reporting by companies,” said EFAA director Paul Thompson.

The report goes on to state that on balance the EU initiative to introduce the micro-entities regime has succeeded if success is measured by take-up rates.

Whether it has improved the quality of readily available financial information about limited liability companies is, of course, a completely different question not addressed directly by this report.

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