Implementing the New European Accounting Directive: Making the Right Choices

Tuesday, July 22, 2014 Print Email
The European Federation of Accountants and Auditors (EFAA) consist of professional accountants who provide services to small and medium sized entities (SMEs) in Europe. EFAA arranged a meeting with the help of Association of Chartered Certified Accountants and Nederlandse Beroepsorganisatie van Accountants (NBA). It was concluded that member states have choices regarding implementation of New European Accounting Directive which gives them opportunity to better the accountancy in their respective states and it should be evident that those options are selected for the same. Professionals from various sectors attended the meeting and discussed the criteria to be used for the use of choices.

The new directive was circulated on 26 June 2013 and came into force on 20 July 2013.It relates to financial reports. It substitutes the current directives relating to relating to reporting by firms and clusters. The deadline for implementing directive is nearby and member states have to incorporate it in their local laws by 20 July 2015. It can be both challenging and an opportunity to analyze current accounting setup and make improvements.

Head of corporate reporting at ACCA, Richard Martin debated at the meeting that the choices that member states make canaffect small entities. He added that this is an important and challenging phase as member states have to analyze the path to take. Also some options are already incorporated in law while some are new but even if some options are old introduction of new directive has raised the questions regarding effectiveness of previous legislation.

The discussion showed that some participants are not convinced that the options given to state members will be effective, rather it would create a challenge for them to implement directive. There was also a discussion of what state members actually want, is it improved accounting or just cost reduction?

Coordinator Financial Reporting at NBA, Henk Verohek said that because of options given to members, level of uniformity has declined across Europe and still there are things which are not included in new legislation like soft law, lease and pension accounting etc. He emphasized the importance of quality accounting on economic growth.

President of EFAA, Bodo Richardt concluded in order to implement better accounting in Europe there is a need of further intellectual debates and getting factual, not political, feedbacks.

Source: ReadyRatios

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