EU Directive aimed at simplifying accounting obligations for SMEs discussed

The single accounting directive that the European Parliament approved on Wednesday 12 June was the subject of a debate between MEPs and members of the business community and the accounting profession, at Hotel Phoenicia in Floriana this afternoon.

The Accounting Directive is set to reduce business costs by simplifying accounting obligations for small and medium businesses.

It is envisaged that part of the reduced obligations will benefit Maltese businesses directly, while others will depend on the application of options in the Directive by the Maltese government. 

The debate, entitled 'The Single Accounting Directive: Simplification, Striking the Right Balance' was organised by the European Parliament Information Office in Malta in collaboration with the Malta Business Bureau (MBB) and the Malta Institute of Accountants (MIA).

Nationalist MEP Roberta Metsola participated by means of a video call from Brussels. She sits on the European Parliament's Committee on the Internal Market and Consumer Protection, and spoke in particular about the "think small first" principle of this Directive, which will enable companies to prepare profit and loss accounts, balance sheets and notes that are more proportionate to their size and to the information needs of the users of their financial statements.

Metsola noted that the simplification of accounting rules for SMEs in the EU will allow them to save up to €1.7 billion per year.

As she has done before, the recently elected MEP stressed her commitment to listen and act on issues of national interest, saying: "I am here to represent your interests, so do get in touch with me if there is anything that you or your organisations would like me to raise and address as a member of the European Parliament."

In his introductory remarks, MIA president Anthony Doublet said: "I would like to join the majority of MEPs and EU Commissioner for Internal Market and Service Michel Barnier in welcoming the adoption of the Directive on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, which for the purposes of this event we have referred to as the Single Accounting Directive."

The Directive has been presented by the Commission as one that will truly modernise financial reporting obligations and reduce costs, in particular for SMEs. 

Doublet commented: "While this may be true, the MIA questions whether this will indeed serve to remove the entire administrative burden on SMEs.

Whilst we fully agree with the Commission's proposals intended to support entrepreneurship and responsible business, we find it inappropriate that the proposal characterises accounting as a 'burden' without recognising its beneficial role and added value to corporate management and the economy as well as its public interest dimension. We think that there are other, more real administrative burdens that have not been addressed.

"Although there are a minimum number of simplifications throughout the new Directive, there are others, in particular insofar as micro-entities are concerned, which are only optional and it is up to each member state and its government to strike the right balance between simplification and lack of information," he said.

MBB president George Vella, on his part, said: "The Malta Business Bureau supports the goal to increase the functioning of the internal market. The drive to cut red tape and reduce administrative burden on SMEs lies at the very heart of this Directive.

The business community certainly welcomes the Directive's key proposals of simplifying accounting rules for SMEs. The measures include the significant reduction of reporting requirements."

Vella stressed the importance that all legislation pertaining to business ensures that competitiveness is maintained. Given the current economic environment, European companies must not be put at a competitive disadvantage, due to the risk this poses to growth and jobs, he said.

"The Single Accounting Directive is no doubt a step forward for our SME community, as it simplifies their accounting and reporting requirements. This certainly is an encouraging step, and one can hope that the Directive's objective - to reduce administrative burdens - is remembered in future legislative proposals," said Mr Vella.

During the event, MEP Klaus-Heiner Lehne, the chair of the European Parliament's Legal Affairs Committee, answered questions by the MIA and the MBB via a video contribution. In particular, he referred to the comparability of financial statements, saying that the Directive strengthens the cohesiveness of the Single Market. By keeping financial statements comparable, clear and easy to understand, cross-border activities are facilitated. This allows companies to find further funding outside their home Member States.

The event also featured a discussion on the diverging views on the extent of the desired simplification for SMEs in Malta, where 99% of undertakings qualify as SMEs.

The panellists were Paul Giglio (Patner, Mazars), Bernard G. Scicluna (National Professional Practice Director, Deloitte), Paul Bugeja (Chief Finance Officer, Corinthia Hotels, representing the Malta Hotels and Restaurants Association) and Claudine Cassar (Chairman, Alert Group, representing the Malta Chamber of Commerce, Enterprise and Industry).

The discussion was moderated by Peter Agius, Head of the European Parliament Information Office in Malta.