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August 14, 2008

Copenhagen to host SMESMP congress

Scandinavia, with its SME-dominated economies, is a fitting setting for the fourth annual European Federation of Accountants’ European SME/SMP Congress, which is being held in Copenhagen, Denmark, from 3-5 September. Carolyn Canham previews the event.

From a Western European vantage point it is unusual to view a Grant Thornton member firm as an SMP, but that is what Grant Thornton Finland is, according to the firm’s managing partner, Joakim Rehn.

Rehn is a member of the organising committee for the European Federation of Accountants’ (Fédération des Experts Comptables Européens – FEE) upcoming European SME/SMP Congress. He tells The Accountant that in comparison to the larger European markets, most accounting practices in Scandinavia are SMPs and the SME market is important to all firms. Rehn points out that although Grant Thornton is the fifth largest firm in Finland, most of its 1,000 to 1,500 clients are SMEs, and this would be the same for the local Big Four firms. “We all have small clients and private entities,” he says.

The Nordic Federation of Accountants (NRF) is partnering with FEE for the congress. Rehn represents the NRF on the International Federation of Accountants’ SMP committee, which he said is one reason he was chosen for the congress organising committee.

Global outlook

The committee wants a practical, business-driven approach to the congress, which will assist SMPs in preparing for the future and educate them in what is happening in other parts of the world, Rehn says.

About 30 percent of the attendees will be from Scandinavia. Delegates from France, Germany, the Netherlands, Belgium and the UK will represent about 40 percent, with the remaining 30 percent coming from the rest of the world.

One key issue currently facing Nordic SMPs, which will be discussed at the congress, is the introduction of audit thresholds. Most EU member states have chosen to exempt small companies from the statutory audit requirement but the Scandinavia nations are taking quite diverse paths, Rehn explains.

At one extreme is Norway, which currently has no plans to introduce a threshold. Rehn says Finland introduced a threshold that exempts companies with less than €200,000 ($294,000) annual turnover from statutory audits and Denmark has implemented a similar threshold.

In contrast, the Swedish government is working on changes to the legislation that will implement the maximum threshold allowed under EU law – exempting companies with less than SEK83 million ($13.2 million) in turnover. This would exempt about 96 percent of all companies in Sweden from mandatory audit.

Rehn says the low Finnish threshold has meant Grant Thornton Finland has only lost one client. He is also positive any client losses could be made up for by providing additional services.

Rehn will facilitate a workshop at the congress on the repeal of statutory audits and changes to accountancy for small businesses, with a focus on Nordic countries. Industry experts on the panel will include Henry Irving, a member of the FEE auditing working party and head of the Institute of Chartered Accountants in England and Wales audit and assurance faculty, PricewaterhouseCoopers Sweden financial reporting expert Eva Törning and Finnish Institute of Authorised Public Accountants president Rabbe Nevalainen.

The repeal of statutory audit session will be one of eight workshops, running over two time slots at the congress. The others are:

• effective audit of SMEs;

• taxation and cross-border activities;

• services and tools for SMEs and small practitioners;

• corporate social responsibility: business risk and business opportunity

• quality and SME audits;

• SMPs and the public sector; and

• ethics and the network definition.

As well as the workshops, there will be a number of plenary sessions. Rehn singles out the session on IFRS for Private Entities as one he expects to find particularly interesting.

FEE deputy president Hans van Damme will facilitate the IFRS session and there will be presentations from International Accounting Standards Board (IASB) director of standards for private entities Paul Pacter, Robin Jarvis, who is the head of small business at the Association of Chartered Certified Accountants and a member of the FEE SME/SMP working party, and Françoise Flores, who is chair of the joint European Financial Reporting Advisory Group/FEE working group on IFRS for Private Entities.

“I know [IFRS for Private Entities] will be released next year and it has had a rather cool reception from the EU,” Rehn explains. “But now we are hearing about the field testing and reaction from real users – I think that Robin Jarvis has done a marvellous job there in this process.”

Eventual implementation

Rehn says he has been the driving force in Finland in terms of advocating the simplified standard, and he says there has not been much interest from regulators. “I believe it will be introduced sometime, but where I thought one year ago it would be next year, I now think it will be in about five years. This is very speculative and my own feelings,” he says.

IFRS for Private Entities is still in exposure draft form. The comment letter deadline was 30 November 2007 and in the nine months following that date the IASB staff have analysed comments and field tests and presented the board with recommendations of changes to the draft. The board is currently in a re-deliberation phase and is due to vote on a final standard by the end of this year.

Summarising his feelings about the overall outcome of the SME/SMP congress, Rehn says: “I think the overall message will be that there is an optimistic future for small practitioners despite the heavy burdens on audit and high thresholds.”

The Accountant is a media partner of the FEE European SME/SMP Congress

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