Following yesterday’s announcement by the Government of a new discussion paper “Simpler Reporting for Smaller Businesses”, which proposes easing corporate reporting procedures for very small businesses, ICAS, the Institute of Chartered Accountants in Scotland has warned against the proposals which they see as ‘lowering the bar’.
Interestingly they also adopt the term “micro-entities” to describe these very small businesses, which are presumably run by “micro” businessmen and businesswomen!
The Department for Business, Innovation and Skills (BIS) and the Financial Reporting Council (FRC) proposals would dramatically reduce reporting requirements so that “micro-entities” are only required to file a simplified Trading Statement (in place of the current Profit and Loss account), a simplified Statement of Position and a simplified Annual Return.
The paper also proposes developing an integrated software package for smaller businesses preparing their financial information.
A study conducted by ICAS earlier this year found concern among users of micro-entity accounts that any lowering of the reporting bar would harm transparency and increase the risk of financial indiscipline.
David Wood, executive director of technical policy and services at ICAS, commented: “Our research report provides useful evidence for consideration by the UK Government and European Commission and Parliament on the proposals for micro-entity exemptions. We believe that whilst consideration should be given to reducing the burdens on micro-entities, there should be no reduction to their accounts filing requirements and we would question if this really constitutes a burden for these businesses anyway. Abbreviated accounts already provide limited information and to remove this requirement would appear to be to the detriment of accounts users.”
Well, they would say that, wouldn’t they?
Anyone who has started a business from scratch will know that anything that can be done to reduce the red-tape burden and allow business owners to get on and build the business is very welcome.