PracticeAuditCompany law simplification ‘may harm public and investors’

Company law simplification 'may harm public and investors'

FEE says goal to reduce complexity must be balanced with other goals in financial reporting

The European Federation of Accountants has warned Europe to be careful of
simplifying financial rules to the detriment of public and investor protection.

The reaction from FEE (Fédération des Experts Comptables Européens) follows
yesterday’s announcement on proposals to reduce EU rules relating to company
law, accounting and auditing, from Internal Markets Commissioner Charlie
McCreevy.

FEE said it strongly supports the moves towards better regulation and
simplification, as well as the reduction of administrative burdens that enable
SMEs to focus on business and growth.

But the organisation said this had to be balanced with other public policy
goals such as stakeholders’ information, investors’ protection, markets’
stability and the reduction of transaction costs and cost of capital.

FEE president, Jacques Potdevin, said: ‘Today’s proposals to reduce EU rules
will struggle to deliver the expected and much needed reduction of
administrative costs, most of which originate from regulatory requirements at
national level.

‘Furthermore, the approach to accounting and auditing appears in many
respects to overlook the added value which accounting and auditing provide to a
wide range of stakeholders such as managers, business partners, bankers,
creditors, investors, employees, trade unions and public administrations. In our
experience, greater burdens for business derive, for instance, from multiple and
often overlapping regulatory requirements.’

FEE CEO, Olivier Boutellis-Taft, said professional accountants are in a prime
position to inform the simplification debate and advise on practical measures
since they were involved with business and SMEs daily.

Further reading:

McCreevy
announces moves to reform Europe’s 30-year-old financial rules regime

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