Fans of Robert Zemeckis’ trilogy Back to the Future, who are legion, couldn’t wait to celebrate 21 October 2015. In case you didn’t know about the plot of the movies, that’s the date when Marty McFly and Emmett "Doc" Brown travel to the future.
Ahead of the global jubilee, propagated by social media, fans had a good time laughing about the portrayal of society foreseen by the Back to the Future saga.
On 21 October I happened to be in Brussels – not Hill Valley, California. But possibly in both places nobody saw flying cars, hoverboards, self-lacing shoes, food hydrators or automatic jacket driers.
It wasn’t a convention of Back to the Future geeks, but rather a discussion on SME accounting within the EU. Yet the debate involved some time travelling too.
In light of the European Commission’s green paper on the Capital Markets Union (CMU), the debate about having a common language of accounting for SMEs in the EU is in everybody’s mind.
No one knows what the future holds for such important players of any EU economy. The CMU initiative should make capital markets a regular source of finance for SMEs, and to do so the EC is suggesting that accounting standardisation would be the passport for them to operate cross-borders.
So far the EC has only released an Action Plan developing the CMU, where it briefly states the intention to "explore" with the IASB "a voluntary tailor-made accounting solution". However, such a solution would only be for "companies admitted to trading on SME growth markets."
During our panel discussion in Brussels, organised by QED, I tried to find out where the debate about common accounting standards will lead practitioners, investors and key stakeholders involved across the board.
Don’t miss the views and insights of such a panel of industry insiders (*), whose views resonate at a time when EU policy makers haven’t decided what to do next.
The idea of having comparable and international standards for SMEs, strikes a chord. Europe’s journey in the noughties towards the adoption of IFRS for listed companies inevitably comes to mind.
Back then Sir David Tweedie was at the helm of the IASB and when he left the organisation, IFRS had expanded to more than 130 countries. Tweedie is now committed to achieving something of the similar scale at the International Valuation Standards Council.
As he told me recently, the EU adoption of IFRS gave momentum to the global accounting standards, with leading Commonwealth economies following suit – which made the IASB a de facto global standard-setting body, beyond its initial nature as a think tank.
Now that the EU is starting the debate on SME comparable accounting, the IASB’s lighter version of its global standards (IFRS for SMEs) seems to be one plausible solution. Yet many within the SME sector have voiced concerns about the complexity of these standards.
I hate to use the cliché, but only time will tell whether the future is the past (and the EU adopts IFRS for SMEs).
(*) Olivier Boutellis-Taft, Federation of European Accountants (FEE), CEO; Leo van der Tas, EY, global leader IFRS services;Nicolas Bernier Abad, European Commission’s Directorate-General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA), policy officer accounting and financial reporting;Peter Faross, European Association of Craft, Small and Medium-sized Enterprises (UEAPME), secreatary general.