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

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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

• effective audit of SMEs;

• taxation and cross-border activities;

• services and tools for SMEs and small practitioners;

• corporate social responsibility: business risk and business

• 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