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August 27, 2009

EC changes tune on SME standard

The European Commission will consider the new IFRS for SMEs as part of its review of the European accounting directives.

The commission began a review of the Fourth and Seventh Company Law directives in February. The initial comment period closed at the end of April and a legislative proposal was due for release by the end of the year.

But following the release of the International Accounting Standards Board’s (IASB) IFRS for SMEs last month, the EC decided to take more time reviewing the directives to include a consultation on the new standard.

Several EU member states, including the UK, are proposing to adopt IFRS for SMEs as national GAAP. However, if the standard does not comply with European accounting directives they could be prevented from doing so.

The EC consultation represents a significant change in attitude from Europe regarding the IFRS for SMEs.

The exposure draft of the standard was not well received when it was released last year.

Speaking at a Federation of European Accountants event in September last year, EC Internal Markets director Pierre Delsaux said the commission did not like what was being prepared by the IASB.

He suggested the Fourth and Seventh Company Law Directives could be used instead as a base to develop an EU standard for SMEs.

The final IFRS for SMEs has received widespread praise for being much simpler than the exposure draft.

European Commission staff are now conducting a series of consultations with stakeholders to hear their views on IFRS for SMEs, the reporting needs of SMEs and other issues relating to the EU SME accounting framework.

Written comments have also been requested but no deadline for comments has been supplied.

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