The new Accounting Directive

Transcription

1 The new Accounting Directive One year later REPARIS Senior Officials Vienna, 4 June :15 Didier Millerot

2 EU Financial reporting regimes Medium sized companies (2%) Small companies (22%) ~8000 listed companies (0.1%) Large companies (1%) IFRS EU Regulation directly applicable to listed companies (and more: up to each Member State) ACCOUNTING DIRECTIVE Transposed in 28 national jurisdictions (national GAAP) Micro entities (75%)

3 Accounting Directives - requirements General provisions: Preparation, publication and audit of annual financial statements Contents of management report Formats for presentation (P/L and B/S) Recognition and valuation rules Notes to the accounts - contents

4 The proposals (2009 and 2011) Proposal for a Directive on micro entities (2009), proposal for a Directive on small companies and other aspects (2011) Merging and modernising the current Accounting Directives Introducing uniform size categories Harmonised simple regime for small companies Optional ultrasimplified regime for micro entities Reduction of Member State options Motto: simplification, comparability, clarity!

5 The Results: Directive 2013/34/EU Merging and modernising the current Accounting Directives Introducing uniform size categories (and at least define small companies) Harmonised simple regime for small companies Optional ultrasimplified regime for micro entities Reduction of Member State options

6 Key change: the simplified regimes for small and micro undertakings Small undertakings: Introduction of a mandatory «safe harbour» Obligation to address small undertakings (<50 employees) in each Member State Best way to do this: to define this size-category Micro-undertakings (<10 employees) are in the small size category unless stated otherwise in the legislation of a Member State (see below) «Gold plating» is not possible. The Directive spells out which information and which statements should be prepared by small undertakings Micro undertakings: Within the small regime, introduction of an option to simplify further If a Member State implements one of the simplification option: need to distinguish micro-undertakings Best way to do this: to define this size-category The Directive spells out the minimal regime that can be implemented Flexibility on the degree of simplification, depending on each Member State

7 Limitation on notes 4 th Directive Directive 2013/34 Usual Recurring Notes required by the Directive Optional Recurring Notes the Directive grants an option to Member States to require these notes Conditional Notes the Directive requires these notes, but only when specified circumstances are met Other recurring or conditional notes No limit 0 These are notes not foreseen by the Directive but that a Member State may require in addition ("gold plating")

8 Other key changes in the new Directive (1/3) NB: the 2013 Directive is a re-cast of the 4th and 7th Directives rather than a complete conceptual rewrite. Scope: more rules based with foreign entities in chain Definitions: whole new set of definitions, including: Participating interest, related party, group, material Size-categories: uniform size-categories have been introduced per category (micro, small, medium and large). The regime for micro and medium-sized undertakings is an option for Member States Public interest entities: Listed companies Banks Insurance companies and entities defined by a Member State (rare). Should be treated as large, whatever the size - unless exemption permitted Formalised accounting principles Eight principles, including materiality

9 IFRS for SMEs No reference to the IFRS for SMEs in the Directive The standard would not serve the objectives of simplification and the reduction of administrative burden for SMEs It is not a clear option offered to Member States No specific prohibition either: Member States may consider IFRS for SMEs as the basis for their standard However two main hurdles Main hurdle 1, for all companies: Need to check compatibility of the IFRS for SME standard (including the next version to be published in 2014 or 2015) with the new Accounting Directive In particular, the following differences need to be assessed (there may be more!): presentation of unpaid subscribed share capital in the balance sheet Amortisation of goodwill (?) The compatibility check is the Member State s responsibility Main hurdle 2, for small companies: The IFRS for SME standard is more demanding than what is permitted by the simplified regime in the Directive. For instance, no cash flow statement. In this way, some Member States may offer the IFRS for SMEs or similar standard as a voluntary option for small companies

10 Country-by-country reporting "CBCR" Legislative instruments Transparency Directive: Article 6 Accounting Directive: Chapter 10

11 Who? CBCR EU listed and large unlisted companies with activities in the oil, gas, mining and logging sectors Why and what? Promote transparency and good governance as regards the exploitation of natural resources Promote the Extractive Industries Transparency Initiative - EITI Enable civil society in resource-rich countries to hold their governments to account Multinational companies of the EU will disclose payments to governments on a country and project basis. 11

12 Beyond the EU model EU to promote its model on the international scene CBCR can work side-by-side with EITI in mutual complementarity. G8 + G20 support Four MS (FR, UK, IT, DE) have expressed willingness to become EITI compliant. Equivalence.

13 From adoption to application July 2013 July Entry into force Transposition deadline 1st full application by companies (or earlier)

14 Implementation plan Drafted by COM for Member States Covering: Contact points Implementation challenges Technical and compliance (e.g. new concepts, new principles, new approaches) Timing (not foreseen yet) Other (not foreseen yet) Proposed support actions Dedicated functional mailbox for communication Holding bilateral and multilateral meetings upon request Holding transposition workshops Creating a specific intranet website with restricted access

15 Implementation status Transposition activities began No problems of compliance foreseen at deadline The most active support actions / implementation tools: Transposition workshops Dedicated functional mailbox

16 Implementation status - workshops Total of 5 workshops planned During 24 months 4 workshops in already held (the last one on 2 June) 1 workshop in 2015 (for last minute legislation rush hour) Full day meetings of experts

17 Implementation status - workshops Topics Permanent topics: Question & Answer papers (Q&As) Q&As on the interpretation of certain provisions of the Accounting Directive 78 Q&As so far drafted, more in the pipeline! Discussion of progress of Member States Changing topics: Discussion of specific subjects e.g. sanctions, publication, country-by-country reporting on payments to governments, micro-undertakings, small-regime, public-interest entities

18 Implementation status - results Member States are in good progress: Holding consultations /drafting laws Aiming for adoption of laws in 2014 mostly Planning for first full application in financial year 2016 Early application is seldom: Country-by-country reporting on payments to governments Micro-undertakings (3 Member State already implemented) No missing of transposition deadline foreseen

19 Non Financial Reporting Commission proposal of April 2013 Objectives: To increase EU companies transparency and performance on environmental and social matters, and, To contribute effectively to long-term economic growth and employment. How: By disclosing in their management reports relevant and material information on policies, results and risks concerning environmental aspects, social and employee-related matters, respect for human rights, anti-corruption and bribery issues, and diversity on the boards of directors

20 NFR proposal - Possible timeline May 2014 Adoption by the EP and Council Q3 2014? Entry into force 2017? 1st full application by companies

21 New initiatives

22 Any questions? Thank you!