The European Commission has issued a consultation paper on review of the accounting directives aimed at cutting the accounting burden for micro entities. Micro-entities are defined as companies with a balance sheet of less than €500,000 (£445,000), net turnover of less than €1m, and an average number of employees of 10 or fewer during the financial year. Companies that fall under two of the three categories qualify.
This project is the third step in the simplification of accounting rules for SMEs and other companies in the scope of the Fourth and Seventh Company Law Directives ("Accounting Directives"), which began with a fast-track proposal in 2008. A Member State option to create a new "micro" entity category in order to exempt them from the accounting requirements under the 4th Directive is being proposed by the European Commission, simultaneously with the launch of this stakeholder consultation.
The current consultation aims at raising issues relating to the modernisation and simplification of the Accounting Directives. Positive effects of the review will include a reduction of burden mainly for small companies as well as qualitative improvements for all companies within the scope of these Directives. An additional objective is to increase the clarity of the text for lawmakers and users in general.
Following an analysis of the comments received to the consultation paper a legislative proposal will be presented by the end of 2009.
The consultation period ends 30th April 2009.