SMALL BUSINESSES could soon be exempt from financial reporting requirements following a vote in the European Parliament.
Micro-entities' reporting requirements will now be set at member-state level, a move welcomed by those who point out such businesses rarely operate across borders.
To be eligible for the more relaxed rules, businesses must meet two out of three criteria: less than €750,000 turnover; €350,000 assets; ten or fewer employees.
ICAEW head of financial reporting Nigel Sleigh-Johnson called the move "a step in the right direction," but said there is an important balance to be struck.
Demand for financial information from banks and other users is unlikely to drop, he warned, saying: "It is absolutely critical that any initiatives to reduce or change the reporting requirements are not confused with the importance of sound financial management by these businesses."
As a result of the vote, micro-entities could be exempted from preparing full accounts, and some stakeholders are also calling for an end to statutory audit for this group.
To finalise the decision, the European Council must give its approval, but this stage is generally seen as a formality and is unlikely to derail the deregulatory process.
Simplification for micro entities is fine, but HMRC calls the tune on the type of accounts that small businesses have to prepare. Does this EU initiative overide this?
Posted by: Daniel Gricks, 06 Jan 2012 | 09:42
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