ICAEW: EU given “free rein” on micro-business reporting

THE EUROPEAN COUNCIL has adopted a new regime which will allow European member states "free rein" on constructing micro-business financial reporting requirements, the ICAEW has said.

As part of a three year project the EC will now permit individual member states to decide how micro-businesses will report their financial statements, allowing for a closer alignment of national laws and tax systems.

"Micro-businesses represent a substantial proportion of the UK economy, and is a key source of start-up activity and innovation, vital to the UK's economic recovery. Reducing the regulatory burden on these businesses where possible is something we strongly support," said Dr Nigel Sleigh-Johnson, head of ICAEW's financial reporting faculty.

"Now that the UK - along with other EU member states - has been given free rein to determine what rules are appropriate for the smallest companies, it is a good time to revisit the debate about the FRSSE (Financial Reporting Standards for Smaller Entities), and how a reporting regime can be designed for all small companies that is fit for purpose. There is still important work to do in this area."

Update:

A statement from the Chancellor George Osborne, said: "I am very pleased that today the Council has given its final agreement to measures that will significantly simplify the preparation of annual accounts for more than 5 million of Europe's smallest companies - so-called "micro-entities".

"These reductions in "red tape" will free up micro-entities' resources so they can be invested in growing their businesses and deliver the growth that Europe needs to exit the crisis. This agreement shows the EU is committed to reducing regulatory burdens.