The importance of transparency
James Barbour, Director, Technical Policy commented, “To begin with, I am sceptical that the figure of 1169 Euros which the Commission says would be saved by businesses by not preparing accounts is accurate. More importantly, this proposal could be damaging. It removes a crucial layer of transparency from small businesses. How can a lender make a judgement on the quality of a business when they can’t see properly prepared accounts? How can suppliers have confidence they will be paid? Importantly, accounts are also used by the owners of the business to assess the company’s performance and financial position.
“Even if the UK government took advantage of this member state option, companies here would still have to prepare accounts for other reasons – corporation tax purposes being one example.”
ICAS is supportive of the review of the 4th and 7th directives and welcomes the adoption of a ‘think small first’ principle, but is concerned that the current business reporting regime is not weakened. James Barbour added, “The Directives have now been in place for a number of years and therefore, the time is right for a full scale review of their content. However, the proposal to introduce a new category of companies prior to a full scale review appears at best unwise.”
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