Europe is at crossroads and needs to address a number of audit
and accounting issues quickly, according to EC Internal Markets
director Pierre Delsaux.

Speaking at the FEE SME/SMP Congress in Denmark this month,
Delsaux had three main messages to impart. The first was that the
EC wants more co-operation with SMPs.

The second was that to reduce complexity, there needs to be
co-operation between the EC, parliament and member states. The
third focused on member states’ transposition of the Eighth Company
Law Directive, with Delsaux saying states should stick to what was
agreed to at commission level.

From left to right: Nordic Federation of Accountants
secretary Bjorn Markland, FEE president Jacques Potdevin and FSR
president Kurt Gimsing

Delsaux said accounting is a sensitive topic and a difficult
issue, however there were three positive points. The first was that
moves in the US towards adopting IFRS “show our decision was

The second was progress by the European Financial Reporting
Advisory Group [EFRAG]. “EFRAG is even more fundamental now that
the US is moving to IFRS. Now the US will put a lot of resources
into influencing the [International Accounting Standards Board –
IASB],” Delsaux said.

“The EU needs to do the same or we will lose out; and to
influence the IASB we need a strong EFRAG.”

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The third positive point was progress on the governance of the
IASB. Delsaux said he hopes the final solution will include more
influence for bodies such as the EU.

The association between complexity and accounting was one
difficult issue, Delsaux said. An action plan the commission
launched in 2007 seeks to reduce administrative burdens on
businesses in the EU by 25 percent by 2012. A study published in
July this year predicted that if small companies were excluded from
the requirements of the Fourth Company Law Directive, it would meet
a quarter of the 2012 target. Delsaux conceded that the study was
of cost, not benefits, but said that when politicians hear such
figures there is pressure.

ISAs were another topic Delsaux touched on. He said the EC is
analysing the costs and benefits. “At this stage, there is no
formal decision because we don’t know the content of the ISAs,” he

“We are not going to make mistakes as we have in the past by
saying we are going to adopt standards when we don’t know what they

The commission does believe it is best to have one global set of

“If, and this is a big ‘if’, the results of the clarity project
are favourable, then we are likely to move forward,” he said.

One aspect of audit where the commission is stalled is ownership
of audit firms. Last December, the commission said it would issue a
consultation document in the first quarter of this year. That was
delayed to June, however the document has still not appeared.

Delsaux said the commission is still reflecting on its position
on that issue.