EFAA

On 20 January, EFAA hosted its first conference of 2011, in Brussels, to discuss the contribution of SMPs to good financial reporting and to encourage their practices to improve quality.  EFAA President Geoffrey Britton opened the event by saying that SMPs were entering a very interesting and challenging period.  The Commission was about to review the financial reporting and auditing framework in Europe and acceptance by SMPs of the necessity for them to provide added value services was absolutely critical.  The move from accountant and auditor to business adviser would need considerable change- management skills for many practitioners and practice staff – and the consequent requirement for accounting education to develop in this direction would be of paramount importance.   To read more and to download all the presentations

Geoffrey Britton started the first session on “Financial Reporting For SMEs: Practice v Theory” by raising the issue of regulation for SMEs from the view point of a practitioner. He was keen to impress on the audience that we should not see good financial management as regulation; it is the key to good business not an administrative burden. Indeed many practitioners were keen to submit to voluntary regulation imposed as a result of joining professional organisations and applying other quality standards in relation to the establishment of best practice, ISO growth being evident, especially with regard to cross-border suitability assessments.

Keynote speakers from UEAPME, EFRAG and The European Commission also took the floor during the opening session to talk about SME financial reporting.

Luc Hendrickx Director of Enterprise Policy and External Relations for  UEAPME stated that it was key that SME needs in financial reporting were understood.  Any changes to the reporting framework should focus on relevance, and the benefits of financial statements to their users.

Françoise Flores talked about the anticipated short term evolution of the IFRS framework and its effects and impact on Europe. She stressed the increasing influence of non western countries within the G20. Although convergence is desired in Europe, there is still a reluctance in Europe to embrace a rules- based approach advocated and practised in the US.. EFRAG is keen to promote a common European stance both within and outside Europe. She concluded by touching on Financial Reporting for SMEs, highlighting the increasing effective action that EFRAG is taking on this field with a view to assisting the EC in the process of the overhaul of the accounting Directives and within the IASB by participation in the SME Implementation Group.

Jerome Hooijer from the European Commission outlined current EC thinking with regard to Financial Reporting for SMEs in Europe. Mr. Hooijer presented an executive summary of the recent evolution of financial reporting for non listed companies.  He stressed the importance for the EC to reduce administrative burdens on SMEs and therefore the desire to complete the process of simplification within the accounting legislation. Considering the fact that IFRS for SMEs seems unlikely to be adopted in Europe and that the Micro Entities proposal is still blocked in the Council, he illustrated the way the Commission is likely to seek to have the accounting directives reformed by means of a new framework which applies a bottom up approach and satisfies the often less complex needs of SMEs. This approach may be based on a standard layout for balance sheet and profit and loss account plus basic disclosures. The level of disclosures would then increase with the size or complexity of the company.

A Panel Session chaired by Federico Diomeda discussed the potential changes in financial reporting for SMEs. The delegates had the opportunity to address comments and concerns especially to the EC representative challenging him on the proper understanding of the needs of SMEs (still under study) and the effectiveness of a “simplified “ approach to SMEs which may only appear to reduce requirements without adding to quality. Mr. Hoojier took the opportunity to clarify the point of view of the Commission highlighting the political implications of such a process and the fact that there is a strong desire to reduce administrative burden on SMEs in order to allow them to restart the growth of the European economy.         

The second session focused on “People Power And SMPs As Business Advisers”.  

Giancarlo Attolini introduced the IFAC Practice Management Guide with particular emphasis placed on the module: “People Power”.  This section enables SMPs to consider recruitment and staff retention as a key objective and calls on SMPs to develop leadership models and consider the importance of non-technical skills which are paramount to the future success of the practice.

Anne-Marike van Arkel added the SMP view to the debate and discussed the current issues in Education from the SMP standpoint and at the same time provided valuable feedback from accounting students.

Robin Jarvis rounded off the presentations with a summary of the evidence of the role of SMPs as business advisers developed from the growing information needs of SMEs.  This included a brief introduction to the market for HR services demanded from SMEs.

All four presenters then joined a very interactive panel session moderated by Professor David Hunt (Institute of Financial Accountants). This centred on future challenges faced by SMPs whilst trying to add value to SMEs from an education and training perspective.

SESSION 1: FINANCIAL REPORTING FOR SMEs: PRACTICE V THEORY
Geoffrey Britton , EFAA
Luc Hendrickx , UEAPME
Jeroen Hooijer, European Commission
Françoise Flores , EFRAG

Panel Session 1 – The future of Financial Reporting for SMEs – moderated by Federico Diomeda

SESSION 2: PEOPLE POWER AND SMPs AS BUSINESS ADVISERS
Giancarlo Attolini, IFAC SMPC
Prof. Mark Allison, IAESB
Anne-Marike van Arkel, NBA
Prof. Robin Jarvis, ACCA

Panel Session 2 – “Education for the profession – what next?”  moderated by Prof David Hunt