The EU parliament has voted to exempt
micro-entities from the EU’s financial reporting requirements,
which will enable member states to individually decide what
reporting rules to apply for small businesses.

The exemption, part of the EU Fourth Company
Law Directive, was said to be a “step in the right direction and
the culmination of an initiative that has been underway for nearly
three years” by the Institute of
Chartered Accountants in England and Wales (ICAEW)

ICAEW head of
financial reporting faculty
Nigel Sleigh-Johnson said as the
majority of businesses of this size don’t operate beyond their home
country’s borders, “it makes sense to allow each member state to
decide what reporting rules are appropriate”.

“There is an important balance to be struck
here, as there will be continuing demand from various types of user
for reliable financial information about micro businesses. It is
also absolutely critical that any initiatives to reduce or change
the reporting requirements are not confused with the importance of
sound financial management by these businesses,” Sleigh-Johnson

Once the European Council gives its seal of
approval on the voted exemption, member countries will have to
decide whether or not to implement changes to existing
micro-entities’ reporting rules.