New EU accounting rules

Earlier this month the European Council, Parliament and Commission reached a compromise agreement on the new EC Accounting Directive, reports accounting services Harris & Co. The European Parliament and Council vote on formal adoption of the new Directive is expected by the end of July and, once finalised, Member States will then be given two years to implement the Directive in national law.

The implications of the new Directive for small company financial reporting could be far reaching. The compromise text includes provisions which could:

· Increase the small company limits for turnover and balance sheet total to €10m and €5m respectively with an option for individual Member States to use further increased limits of €12m and €6m if they wish; and

· Reduce the length and complexity of small company statutory accounts by setting a cap on the mandatory disclosure requirements that can be required by individual Member States.

The UK Government have recently set out that, save in exceptional circumstances, the UK will not go beyond the minimum requirements of measures being transposed from EU law. Expect to see more on this later in the year as the UK Government look to strike a balance between reducing regulatory requirements whilst still providing useful financial information to the users of small company financial statements once the Directive passes into European law.

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