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Latest From Brussels | December 2021 N° 22

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Looking back, looking forward, thanking you and
wishing you season’s greetings

 

Since the onset of the global pandemic, EFAA for SMEs has rapidly adapted to ensure it keeps providing valuable services to its members. At the same time, little by little, and with the invaluable help of EFAA’s members, the voice of small- and medium-sized practices (SMPs), which has become ever more important, has never been better heard.

In this short issue, we wish to highlight some of our key achievements in 2021, share some of our top priorities for 2022 and, last but not least, express our thanks and wish you seasons' greetings.

 

Looking Back
EFAA serves its member organisations and their more than 370 000 individual members, who are the trusted advisors of millions of SMEs. Its strategy is structured around three pillars: informing, connecting, and advocating.

Our key achievements in 2021 include:

Looking Forward
As 2021 has proved, it is impossible to predict the future with any degree of accuracy. What we can expect is that 2022 will be at least as busy, challenging, and productive as 2021.

Our priorities include:

  • Emphasizing to policy makers and relevant stakeholders the importance of the role played by SMPs in the European economy and in society, not least in view of their close relationship with their SME clients.  
  • Voicing the needs of SMPs and their SME clients, by continuing to promote the use of the “think small first” principle and by seeking to ensure a balanced and fair regulation of SMP and SME activities.
  • In line with the “think small first” principle, advocating for the specific needs of SMPs and ensuring a diversified and sustainable professional accountancy service market; with this in mind, promoting EU harmonisation policies which are in the best interest of SMEs and SMPs as well as the public interest.
  • Advocating for robust and internationally comparable financial reporting for SMEs, for a scalable European sustainability reporting standard for SMEs, for a reduction in the incidence of late payment, for a stand-alone audit standard for less complex entities (LCEs) / SMEs, and for the achievement of a complete EU single market founded on the "Think Small First" principle and on “Smart Regulation”.
  • Sharing and developing insights and ideas, practical guidance, tools, and resources to help SMPs transform their practices, embrace digital technologies, and broaden the range of services they offer, in so doing  becoming smarter, stronger, and sustainable.
  • Forging even closer links with Members of the European Parliament, the European Commission, and with other stakeholders
  • Hosting the EFAA International Conference in June 2022 as well as several webinars
  • Increasing further the cooperation with EUIPO in order to reach out to, and inform on IP rights, both SMPs and, through them, their SME clients.
  • Continuing the collaboration with the partners of the ERASMUS+ project INTEgrated REporting for SMEs Transparency (INTEREST), to participate in the finalisation of the reporting framework, of the guide and of the training modules: these materials will help SMPs prepare integrated and sustainability reports for SMEs.
  • Contributing to the Early Warning Europe Network

Thanking you and wishing you season’s greetings
We have many to thank. The members of the EFAA Board of Directors, our treasurer, our expert group and working group members, our member organisationsEFAA’s Special Advisors and our stakeholders. But, most of all, you, the reader. For supporting us in our endeavour to better serve, support and speak for SMPs across Europe.

We wish you all seasons’ greetings!
 

 

 

 

 

 

Member Feedback and Contributions 

Please share this newsletter with colleagues. Members are welcome to translate and reproduce extracts from this newsletter for their own communication purposes while acknowledging this newsletter as the source.

The next issue is slated for mid January 2022. We welcome feedback on how to improve this newsletter as well as contributions from our members, especially initiatives that other EFAA members might be keen to know about.

Please contact Sara Zambelli / Paul Thompson

 

 

 
 
 

@EFAAforSMEs

EFAA.com

 

 

 

Please follow the EFAA Twitter feed for regular and relevant news posted daily here.
Join EFAA’s Digital Community here by emailing Martin de Bie or Paul Thompson.

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Latest From Brussels | November 2021 N° 19

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Foreword from the President - Salvador Marín

Member Use, Feedback and Contributions
Upcoming Events
EFAA Digital – Recommended Reading
EFAA Sustainability – Recommended Reading

 

Dear Members and Friends of EFAA,

Sustainability is a hot topic worldwide. The role of EFAA for SMEs being to represent SMPs, it must be represented in the new EFRAG council in charge of sustainability reporting advisory. 

Accountants and auditors are restructuring and are redefining their roles and objectives in the light of the current global challenges that we are all facing. For this reason, it is more important than ever that the voice of EFAA for SMEs, the main spokesman for SMPs, is being heard loud and clear in various forums, even on the football ground, as happened at the event cohosted by Spanish LaLiga and CGE this week to discuss sustainability reporting by football clubs and the role of SMPs.
 
We are also maintaining our close relationship with Early Warning Europe, looking for tips in order to help our SMPs better advise their SME clients.
 
Following on our recent admission as a network partner of IFAC, we have co-organised a webinar on the new opportunities that sustainability offers for SMPs. We are playing in the middle of the field where sustainability is concerned and we are not going to miss any of the chances that this topic will generate for all our practitioners and enterprises.
 
We are getting stronger and better thanks to all your support.


Yours sincerely,

Salvador Marín
EFAA President

 

EFAA President's Activities

 

7th Congress of the Romanian Auditor Profession, Virtual Event, 29 October 2021
EFAA President, Salvador Marin, and EFAA Director, Paul Thompson, participated in this virtual conference. Salvador spoke about the lessons learnt from practicing the profession in the new normal and what the EC proposal says about sustainability auditing. The video is available here. Paul joined a workshop session in which he made a presentation on the audit of less complex entities (LCE). The presentations given during the event are available here and the video messages here.

EFRAG Meeting, 25 October 2021
Salvador Marin represented EFAA for SMEs at the EFRAG Meeting on the new sustainability pillar, where the future board, its structure and representatives were discussed. The position of EFAA for SMEs is clear: SMPs, being the main advisers of SMEs, must be represented in this new pillar by EFAA, their representative and the leading umbrella organization in this field in the UE. 

Early Warning Europe Day Working Group Meeting, 2 November 2021
Salvador Marin represented EFAA for SMEs, where several points of interest for our practitioners were discussed. 

Edinburgh Group AGM and Meeting, Virtual, 9 November 2021
Salvador and Paul joined these meetings, the latter focusing on input to IFAC’s recently commenced governance review.

La Liga and CGE, "Complying with Law 11/2018 on non-financial information or on sustainability", 10 November 2021 
Salvador Marin, President of EFAA for SMEs, participated as a speaker in the conference on "Complying with Law 11/2018 on non-financial information or on sustainability" organized by the General Council of Economists of Spain and La Liga. The objective of the event was to discuss the obligations and content of sustainability reports as applied, in particular, to football clubs. Salvador Marín highlighted the important role of SMPs in this field of activity as well as the leadership role and work provided by EFAA towards its proper development.

For more information: Please contact Salvador Marín

 

Other EFAA's Activities

 

ERASMUS+ INTEREST Meeting, Udine, Italy, 18-21 October 2021
Paul participated in an in person meeting of the ERASMUS+ INTEREST project which is expected to publish training and implementation materials in 2022. Read more here

Global Summit of Integrated Reporting Communities, Virtual Event, 13 October 2021
Paul participated in the first Global Summit of Integrated Reporting Communities along with several hundred community members from the Americas & EMEA. The conference booklet provides descriptions of the communities, the slides from the conference are here, and session recording here.

For more information: Please contact Paul Thompson

 

EFAA International Conference 2021 - COVID-19: SMPs Recovering Smarter, Stronger, Sustainable

 


The EFAA International Conference 2021 COVID-19: SMPs Recovering Smarter, Stronger, Sustainable – a hybrid event held in person in Brussels and online - underlined the vital role that SMPs and their professional accountancy organizations (PAOs) stand to play in the growth and prosperity of the EU economy and society. On the conference webpage you will find the slides and session videos together with an article summarizing the event. 

For more information: Please contact Sara Zambelli

 

Upcoming EFAA Events

 

EFAA is co-hosting two events before the year-end as follows:

  • 19 November, 15:00-17:00 CET: Global Solution for Auditing Less Complex Entities by EFAA for SMEs, Accountancy Europe, and IAASB. For more information and to register please go here

  • 15 December, 14:00-15:30 CET: Sustainability Offers New Opportunities for SMPs by EFAA and IFAC. For more information and to register please go here.

For more information: Please contact the EFAA secretariat

 

Role of the Profession and SMPs in Sustainability

 

IFAC notes that the impacts of climate change are compelling regulators around the world to act. The SEC, EU and G7, for example, are looking to address these climate pressures and showing support through expanding mandatory disclosure laws. This has brought the role of accountants to the forefront and challenges companies and accountants to play an active role in determining the way climate change information is disclosed in corporate reporting, and in particular, financial statements. With this in mind IFAC has partnered with the CDSB to host the event, Accounting for climate: practical guidance to incorporating the TCFD requirements. The event brought together 180 professional bodies representing over 3.5 million accountants to discuss and connect them with the UNFCCC’s climate action process. The event stressed how accountants working in business and in audit can be part of the solution to the climate crisis by delivering trusted information to investors and others – see event recording here.

In July 2021, EFAA issued a 
Call to Action: SMPs Supporting Creation of the Sustainable Economy in which we stressed the opportunities as well as the challenges of building the capacity and expertise to offer high quality services. EFAA is now pleased to share with you our first podcast, “The Future of Corporate Reporting in Europe: What are the Implications and Next Steps for Europe’s Small- and Medium-Sized Practices?”, with Salvador Marin, EFAA President, Esther Ortiz, EFAA Representative on EFRAG PTF-ESRS, and Paul Thompson, EFAA Director. This podcast accompanies the recent publication ‘What SMPs and SMEs Need to Know About Sustainability Reporting’. EFAA has recently commenced a research project on the role of SMPs in enabling the sustainable transition of SMEs.

In the run up to COP 26 the 13 industry associations, including the ACCA, that form the Accounting Bodies Network (ABN) 
said that accountants have significant influence and responsibility in the global effort to tackle climate change. The ABN, whose bodies collectively represent over 2.5 million professional accountants and students worldwide, has publicly committed to helping the industry reach net zero emissions “as soon as possible”, and intends to publish more detailed plans for how to achieve this within the next 12 months.

For more information: Please contact 
Paul Thompson

 

European Commission’s Public Consultation on Corporate Reporting Ecosystem Just Published

 

The European Commission (EC) has created a webpage indicating the timetable for the overhaul of the corporate reporting ecosystem. This initiative aims to improve the quality of corporate reporting and its enforcement, by addressing shortcomings in the underlying eco-system. A Roadmap indicating EC’s objectives and policy options under consideration is expected in the coming weeks and the public consultation some four weeks later. EFAA plans to respond to the consultation .

For more information: Please contact 
Paul Thompson

 

COP 26 and Related Developments in Sustainability Reporting and Assurance

 

Global
During COP 26 the IFRS Foundation announced establishment of the International Sustainability Standards Board (ISSB). The ISSB will work in close cooperation with the International Accounting Standards Board (IASB) under the governance structure and leadership of the IFRS Foundation. Watch this short video in which Erkki Liikanen, chair of the IFRS Foundation Trustees, introduces the announcement and read his speech from COP26 here.

IFAC has 
welcomed the news stating that “climate and other sustainability issues are global in nature and the ISSB will deliver a global solution for sustainability disclosure.” The IFRS Foundation also announced it will consolidate the Climate Disclosure Standards Board (CDSB—an initiative of CDP) and the Value Reporting Foundation (VRF—which houses the Integrated Reporting Framework and the SASB Standards) – into the new board and complete the process by June 2022. IFAC believes this will provide much needed consolidation and contributing support and resources toward the success of the new ISSB. Finally, the IFRS Foundation published prototype climate and general disclosure requirements developed by the Technical Readiness Working Group (TRWG), a group formed by the IFRS Foundation Trustees to undertake preparatory work for the ISSB. The ISSB might be ready to publish these prototypes as proposed standards in the second half of 2022 – read more here

Europe
The European Financial Reporting Advisory Group (EFRAG) participated at a European Commission side event to COP 26. The event focused on the EC proposal for a Corporate Sustainability Reporting Directive (CSRD) and EFRAG’s work on EU sustainability reporting standards. Read more about the event here, watch the video recording here, and view the PTF-ESRS Chair’s presentation transcript here, and his presentation slides here. Significant progress continues to be made in the development of EU sustainability reporting standards (ESRS). The Project Task Force – European Sustainability Reporting Standards (PTF-ESRS) comprises 9 clusters including an SME one which has EFAA expert Esther Ortiz as a member. EFRAG has announced the composition of the eleven Expert Working Groups to provide input for the development of draft ESRS - read the full press release here. Follow the developments in connection to the preparation of draft ESRS on the EFRAG website here. On 28 October 2021, the week before COP26,  the proposed CSRD was presented by the rapporteur and debated by the European Parliament’s JURI Committee – see the session recording here (from 9h 33mins). 

For more information: Please contact 
Paul Thompson

 

Other Developments in International Standard Setting

 

General

IFAC has unveiled a new online resource - eIS, short for e-International Standards – that provides direct access to the standards developed by the International Audit and Assurance Standards Board (IAASB), the International Ethics Standards Board for Accountants (IESBA), and the International Public Sector Accounting Standards Board (IPSASB), alongside key support, reference, and guidance materials.

Audit, Assurance and Quality Management
The International Auditing and Assurance Standards Board (IAASB) has announced new appointments and re-appointments to take effect on I January 2022. One of the reappointed members is Kai Morten Hagen, Technical Director at Den Norske Revisorforening (Norwegian Institute of Public Accountants) who chairs the IAASB’s Task Force for the audit of LCEs.

The IAASB has a targeted 
outreach plan to promote awareness and debate on the exposure draft (ED) of its new, stand-alone standard for audits of financial statements of LCEs which includes the Global Solution for Auditing Less Complex Entities event by EFAA, Accountancy Europe and the IAASB on 19 November 2021. The landmark new draft standard is summarized in this IFAC Gateway article. EFAA’s Assurance Expert Group will lead the development of EFAA’s response. EFAA is highly supportive of this project since the new standard has the potential to greatly enhance the efficiency of SME audits and free up time for auditors to provide the advice that SMEs really value. EFAA research from 2019 finds significant value in an SME audit.

The IAASB and IFAC Second Quality Management Webinar ‘Are Your Firm and Its Engagements Partners Ready for ISQM 1?’ highlighted resources and expectations for firms and engagement partners – read more 
here.
EFAA member ACCA has published, in collaboration with other PAOs, its new report called 
Closing the expectation gap in audit – the way forward on fraud and going concern: A multi-stakeholder approach. The report offers recommendations based on research with key players in the financial reporting ecosystem.

Ethics
The International Ethics Standards Board for Accountants (IESBA) has released the 2021 Edition of the Handbook of the International Code of Ethics for Professional Accountants (including International Independence Standards)The new edition contains recently approved revisions to the Code as explained here

Reporting
Listen to the latest EFRAG podcast related to the European Lab Project Task Force on the reporting of non-financial risks and opportunities and the linkage to the business model (PTF-RNFRO) report: Towards Sustainable Businesses: Good Practices in Business Model, Risks and Opportunities Reporting in ​the EU and Supplementary Document: Good Reporting Practices. This third and final episode on the report highlights the current and potential role of technology in sustainability reporting. The first two episodes can also be listened to here. EFRAG also hosted a webinar based on the report on 3 November 2021 - read the programme here and access the recording here.

EFRAG has issued an 
online questionnaire / invitation for an interview for all types of preparers to get feedback on a new approach to developing disclosure requirements in individual IFRS Standards by the IASB (which is tested on IFRS 13 Fair Value Measurement and IAS 19 Employee Benefits). The questionnaire, which targets specifically small and medium entities (SMEs), can be completed until 20 November 2021. EFRAG is especially interested to speak with the auditors and accountants of smaller listed entities, often SMPs, to assess how they perceive this new disclosure approach and what they see as advantages or disadvantages for their clients. Read more here.

The Report of the SMEIG meeting of September 2021, in which EFAA’s Paul Thompson and Jose Maria Hinojal participated, is available 
here. This report is helping the IASB shape the exposure draft on proposed changes to the IFRS for SMEs due to be issued in the first half of 2022.

For more information: Please contact 
Paul Thompson

 

Guidance for SMPs

 

 

To help SMPs and their SME clients come through the COVID-19 crisis stronger, smarter and sustainable EFAA has a specially curated list of free guidance here. This guidance will enable SMPs to better manage their practices and provide high quality services to their SME clients. Since the last issue of this newsletter one more article has been added as follows:

Other articles / podcasts providing useful guidance to help SMPs grow and prosper include the following:

  • Time has come for firms to cull clients – this article argues that to free up capacity to take advantage of new opportunities SMPs may need to cull clients who are difficult to work with or who are otherwise a bad fit for the firm (AICPA, 18 October 2021).

  • How to shift to advisory services - as the conversations around advisory keep getting louder, firms will need to figure out how they want to fit into this movement (Accounting Today, 12 October 2021).

  • What type of culture does your firm have? – this podcast helps SMPs determine what culture predominates in their firm so they can hire the right people and adopt the right approach to change (AICPA, 18 October 2021).

For more information: Please contact Paul Thompson

 

SMEunited Barometer Reveals Strong SME Growth

 

SMEunited have presented the new EU Craft and SME Barometer Autumn 2021. The barometer reveals SMEs are recovering faster than expected, but uncertainty is rising. The SME Business Climate reaches 76.1%, increasing by 16.3 points from the previous quarter. Please find the final version of the Barometer here and related press release here.

For more information: Please contact 
Paul Thompson

 

 

 

 

Member Use, Feedback and Contributions 

Please share this newsletter with colleagues. Members are welcome to translate and reproduce extracts from this newsletter for their own communication purposes while acknowledging this newsletter as the source.

The next issue is slated for late November 2021. We welcome feedback on how to improve this newsletter as well as contributions from our members, especially initiatives that other EFAA members might be keen to know about.

Please contact the 
Secretariat

 

 

 

 

 

 

 

2021

17 November (14:00 CET): IAASB LinkedIn Live Discussion (Part 3) on Proposed New Audit Standard for LCEs


19 November (15:00-17:00 CET): Joint event EFAA for SMEs - Accountancy Europe: A Global Solution for Auditing Less Complex Entities


23-25 November: ACCA, ‘Accounting for the Future Conference’ – Virtual


6-7 DecemberValue Reporting 2021 Symposium - Virtual [NEW]


7 December (11:00-12:45 CET): ACCA, EY: Looking at AI through an ESG lens: how do  ethical issues interconnect with ESG issues? [NEW]


15 December (14:00-15:30 CET)EFAA fro SMEs – IFAC, Sustainability Offers New Opportunities for SMPs

 

Please note hyperlinked text to further information. 
If you have any events to add please email Sara Zambelli

 

 

 

 

Guidance – Managing Cyber-risk
In this article read how using extreme caution in email and online activity can prevent a breach that would be costly to you or your business.

 

 

Accountants Diversify Advisory

In this article read how accountants are at the center of non-financial reporting, with firms expanding ESG services to support businesses amid rising climate risks and the gradual onset of mandatory disclosures.  

Enabling SMEs to Take Climate Action
ACCA have published a white paper "The Think Small First" in partnership with Sage and the ICC on enabling SMEs to take climate action. The paper highlights how providing standardised SME-friendly reporting frameworks could unlock significant progress on the journey to Net Zero. It also suggests that governments, policymakers, and large businesses must acknowledge the specific challenges and reporting burdens faced by SMEs and provide support to them.  

Guidance for SMPs – COP 26 and Growing Sustainably
ACCA have a resource hub ‘Growing sustainably' where SMPs can find videos, factsheets, and helpful guides - all the information needed to drive sustainability throughout their practice and their clients' businesses - see here.

 

Latest From Brussels | April 2021 N° 7

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Foreword from the President - Salvador Marín

Member Use, Feedback and Contributions
Upcoming Events
EFAA Digital – Recommended Reading

 

 

 

Dear Members and Friends of EFAA,

The outcome of the review of the NFRD is expected on the coming days. EFAA for SMEs has been working on this topic for several years, seeking to guarantee that any reporting requirement for SMEs is limited to the most important and relevant information and that any report for SMEs which are not eligible for taxonomy is avoided. We have also strongly advocated for an NFR for SMEs that is both specific and voluntary. 

I would also like to stress our engagement in making small- and medium-sized accountancy practices digitalised. The EFAA DCMM is available in 9 languages and, last year, was used by nearly 1,400 SMPs all over the world. It is essential that SMPs understand the importance of using new technologies. I also strongly believe that one of the objectives of EFAA for SMEs must be to increase awareness and make sure that our SMPs remain relevant and adapt to the new needs of SMEs, so as, not only to digitalise, but also extend the range of services provided and include non-traditional accountancy services.

EFAA for SMEs keeps doing its outmost to assist our SMPs in growing, in gaining in importance and in being heard.
 

Yours sincerely,

Salvador Marin
EFAA President

 

EFAA President's Activities

 

Over the last few weeks, Salvador Marín, EFAA President, virtually met with several EFAA members to discuss EFAA’s strategy and future and how to continue to best serve the interests of SMPs. Salvador also represented EFAA in several webinars.

For more information: Please contact Salvador Marín

 

CHANGE OF DATE: EFAA International Conference 2021

 


Circumstances have demanded that EFAA defer its International Conference 2021 to late September or October. The hope is that the event will be in person – more details will follow in early April and posted here. The conference is predicated on the basis that small- and medium-sized accountancy practices post COVID-19 stand to play a crucial role in helping SMEs recover from the coronavirus crisis, build their resilience, and ensure their digital and sustainable transition. For SMPs to be effective in this role will demand they be smarter, stronger, and sustainable. SMPs will need to transform their practices by accelerating the adoption of digital technologies and broadening their services. New services may include advisory services related to early warning, insolvency, and sustainability as well as accounting services that include sustainability and non-financial reporting. The SMPs role as trusted advisor to their SME clients will grow ever more important. 

For more information: Please contact Sara Zambelli

 

EFAA Webinar, ‘Future of NFR and the Role of SMPs’, 14:00-15:00 CET 1 June 2021

 

Following European Financial Reporting Advisory Group (EFRAG)’s publication in early March 2021 of two reports on EU sustainability reporting – one setting out recommendations to the European Commission for the elaboration of possible EU sustainability reporting standards​ and the other possible changes to EFRAG's governance an​​d funding if it were to become the EU sustainability reporting standard setter - and the much anticipated announcement slated for 21 April 2021 by the Commission on the proposed revised Non-Financial Reporting Directive (NFRD) (and presented at the Commission’s ‘High-level conference on the review of the Non-Financial Reporting Directive – the way forward’ on 6 May 2021) EFAA has decided to invite you to a virtual event to consider the implications for SMEs and SMPs. Confirmed speakers include: Saskia Slomp, CEO, EFRAG; Luc Hendrickx, Director, SMEunited; Luca Brusati, EFAA Special Advisor; and Esther Ortiz, Member of EFAA’s Accounting Expert Group. Brusati will represent the INTEREST (INTEgrated REporting for SMEs Transparency) Erasmus+ project, of which EFAA is a partner, a project that aims to facilitate the adoption of integrated reporting and integrated thinking among European SMEs through the availability of implementation tools. Please register here. 

For more information: Please contact Sara Zambelli 

 

COVID-19: Updated Guidance for SMPs

 

 

To help SMPs and their SME clients come through the COVID-19 crisis stronger, smarter and sustainable EFAA has a specially curated list of free guidance here (last updated on 15 February 2021). This guidance will enable SMPs to better manage their practices and provide high quality services to their SME clients. 

For more information: Please contact Paul Thompson

 

Developments in International Standard Setting

 

Audit, Assurance and Quality Management
The International Auditing and Assurance Standards Board published Non-Authoritative Guidance on Applying ISAE 3000 (Revised) to Extended External Reporting (EER) Assurance Engagements.  EER encapsulates many different forms of reporting, including but not limited to, sustainability or environmental, social and governance (ESG) reporting, integrated reporting, and reporting on corporate social responsibility. The Guidance responds to ten key stakeholder-identified challenges commonly encountered in applying International Standard on Assurance Engagements 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information. The guidance promotes consistent high-quality application of ISAE 3000 (Revised) in EER assurance engagements to strengthen the influence of such engagements on the quality of extended external reporting, enhance trust in the resulting assurance reports, and increase the credibility of extended external reports so that they can be trusted and relied upon by their intended users. In the IAASB press release IAASB Chair Tom Seidenstein says: “We will continue to closely monitor current global developments to establish a coherent set of sustainability reporting standards, and are prepared to act to enhance our standards, frameworks and guidance to support progress.” The imminent revision of the Non-Financial Reporting Directive will likely require assurance on NFR.

The IAASB has developed implementation plans for its suite of new and revised quality management standards, which were released in December 2020. The plans explain what implementation materials stakeholders can anticipate, topics covered, and expected timing. The plans were originally issued in October 2020 and updated in April 2021.


Ethics
The International Ethics Standards Board for Accountants (IESBA) has released an update on its Long Association Post-Implementation Review (LAPIR). This update provides an overview of Phase 1 of the LAPIR which will review the implementation of a specific partner rotation provision for engagement partners around the world with respect to audits of public interest entities (PIEs). 

Non-Financial / Sustainability Reporting
The International Federation of Accountants (IFAC) continues its work to support the establishment of global sustainability standards in the public interest. In this regard, IFAC has publicly endorsed the most recent actions announced by the IFRS Foundation Trustees and IOSCO. IFAC CEO Kevin Dancey said, “IFAC reiterates its support for the IFRS Foundation to establish an international standard setting board with a focus on enterprise value creation, a unique connection to the work of the IASB, and backing from IOSCO and other authorities. This approach offers the quickest and most effective route to a baseline of internationally consistent sustainability-related disclosures for enterprise value creation developed in the public interest. IFAC calls for international collaboration and cooperation to make this initiative a success.” Read Kevin Dancey’s most recent letter to IFAC member organizations here.
Here in Europe the outcome of the review of the NFRD is expected on 21 April 2021 and will be the focus of the Commission’s ‘High-level conference on the review of the Non-Financial Reporting Directive – the way forward’ on 6 May 2021. SMEunited’s members recently discussed the EFRAG report Proposals for a relevant and dynamic EU sustainability reporting standard-setting and the ongoing work of the Sustainable Finance Platform and concluded that the main ways to avoid unnecessary burdens for SMEs are: ensuring that any reporting requirement for SMEs is limited to the absolute minimum and any report for SMEs which are not eligible for taxonomy has to be avoided; to reduce additional burdens for SMEs, already existing data and information should be used as far as possible; and for cases where SMEs have or want to report, the regulators should apply the proportionality principle and should provide voluntary and simple reporting standards.


Financial Reporting
The EFRAG General Assembly unanimously agreed the new composition of the EFRAG Board. EFRAG invites its constituents to complete this survey relating to its Discussion Paper on Accounting for Crypto-Assets (Liabilities) (DP). Crypto-assets, a by-product of innovation in technology and finance (see background article), continue to draw stakeholders' interest. Accordingly, in July 2020, EFRAG published its DP - developed as part of the EFRAG proactive research agenda. The DP is intended to inform the forthcoming IASB agenda consultation process and is open for consultation until 31 July 2021. Read more here. EFRAG also invites constituents, in particular users of financial statements, to contribute to the post-implementation review (PIR) of the Consolidation Package, under international financial reporting standards.  Participate in the EFRAG survey about the PIR IFRS 10, 11 and 12 by 16 April 2021. Read more here.

For more information: Please contact Paul Thompson

 

Developments in Taxation

 

The European Commission has launched a new consultation on problems taxpayers face in the areas of direct or indirect taxation. The consultation is open until 2 June 2021 and available in 23 languages. The consultation seeks information on problems that taxpayers may face with direct tax (mainly Personal Income Tax) or indirect tax (VAT) and aims to identify best practices that remedy these problems. It should provide input for a European Commission recommendation to Member States on improving the situation of EU citizens as taxpayers for direct and indirect tax, which is planned for the 3rd Quarter 2021. According to tax experts from Kreston International issues around base erosion and profit shifting (BEPS), transfer pricing and the digitalisation of tax are viewed as most likely issues to dominate the tax industry and media landscape for the next two years.

For more information: Please contact Paul Thompson

 

IFAC Issues AML Guidance

 

IFAC, with the ICAEW, has released the sixth instalment in its Anti-Money Laundering: The Basics educational series: Instalment 6: Businesses in Difficulty. The publication is part of a 6-month short series helping accountants enhance their understanding of how money laundering works, the risks they face, and what they can do to mitigate these risks and make a positive contribution to the public interest. Instalment six looks at businesses experiencing financial difficulties and the increased risk a professional accountant may face to inadvertently facilitate money laundering. The instalment series, with its focus on accessibility and ease of use, will be a resource for Small and Medium Practices (SMPs,) and accountants less familiar with AML, while also providing guidance for those looking for a quick refresher or reference. Anti-Money Laundering: The Basics is featured on the IFAC landing page and available for download for free. To be globally relevant, the series uses the risk-based approach of the Financial Action Task Force (FATF) – the global money laundering and terrorist financing watchdog -- as a starting point.

For more information: Please contact Paul Thompson

 

Sweeping UK Audit Reforms Published

 

The UK’s Department for Business, Energy and Industrial Strategy (BEIS) has launched a major overhaul of audit and corporate governance, setting out the government’s strategy to break up a perceived dominance of the Big Four, avoid company failures and maintain the UK’s reputation as an investment hub. The proposals outline the government’s intention to reduce the dominance of the Big Four accountancy firms in the FTSE 350 through “managed shared audit” while also making directors of the UK’s biggest companies more accountable in the case of failings through beefed-up fines and suspensions. There will now be a 16-week consultation period on the proposals. The Commission has already commenced preparations for EU Audit Reform. 

For more information: Please contact Paul Thompson

 

 

 

 

Member Use, Feedback and Contributions 

Please share this newsletter with colleagues. Members are welcome to translate and reproduce extracts from this newsletter for their own communication purposes while acknowledging this newsletter as the source.

The next issue is slated for end of April 2021. We welcome feedback on how to improve this newsletter as well as contributions from our members, especially initiatives that other EFAA members might be keen to know about.

Please contact Sara Zambelli / Paul Thompson

 

 

 

 

 

 

2021

29 April (11:00-12:30 CET): ACCA-ECIIA-Deloitte-Accountancy Europe, ‘Working Together for the planet: Audit & Assurance of sustainability Information’ virtual conference - register here


6 May: High-level conference on the review of the Non-Financial Reporting Directive – the way forward


1 June (14:00-15:00 CET): Future of NFR and the Role of SMPs" - register here [NEW]


25 June: EFAA AGM (Virtual)


TBD: EFAA 2021 International Conference – Madrid

 

Please note hyperlinked text to further information. 
If you have any events to add please email Sara Zambelli

 

 

 

 

 

Guidance - IFAC PAO DIgital Assessment Tool
IFAC recently teamed up with cloudThing to offer IFAC’s membership, and EFAA members who are not IFAC members, a free Digital Assessment Tool to assess an organization’s digital readiness. The PAO Digital Readiness Assessment Tool has been designed to measure how digitally ‘mature’ an organization is or where they already are on their digital transformation journey. At a recent IFAC Professional Accountancy Organization (PAO) Development & Advisory Group meeting, Group members discussed their experiences with digital transformation and the Digital Readiness Assessment Tool. Their insights are offered here. EFAA recently completed the tool and is encouraging its members to do likewise.


Digital Service Act
In its position paper on the Digital Services Act SMEunited said the proposal is a step in the right direction to address the main challenges that SMEs are facing in the Digital Single Market (DSM). In the paper, SMEunited supports the fact that the proposed requirements take into consideration the size and nature of digital service providers, enabling a tailor-made approach. In particular, SMEunited welcomes the exemptions for micro and small enterprises.

 

 

 

 

@EFAAforSMEs

EFAA.com

 

 

 

Please follow the EFAA Twitter feed for regular and relevant news posted daily here.

Join EFAA’s Digital Community here by emailing Martin de Bie or Paul Thompson. We encourage EFAA member organisations and other interested parties to join the EFAA Member Forum to share information and discuss developments.

Latest From Brussels Copyright © 2021 European Federation of Accountants and Auditors for SMEs. All rights reserved.

European Federation of Accountants and Auditors for SMEs
Rue Jacques de Lalaing 4   B-1040 Brussels   Belgium
T +32 2 736  88 86   F +32 2 736 29 64   www.efaa.com

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Latest From Brussels | March 2021 N° 5

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Foreword from the President - Salvador Marín

Member Use, Feedback and Contributions
Upcoming Events
EFAA Digital – Recommended Reading

 

 

 

Dear Members and Friends of EFAA,

The objectives of EFAA for SMEs are, not only to be the voice of Small- and Medium-Sized accountancy Practices (SMPs), but also to exchange information and best practices so as to directly support SMPs in their journey to transform and remain relevant. The COVID-19 resources and the various webinar we are organising aim to achieve this. I am also convinced that the forthcoming EFAA and IFAC event on helping SMPs embrace change will be extremely useful and I hope that many of you will be able to benefit from the event.

Since the beginning of my presidency, I have been voicing the special role SMPs play is society and I would like to stress that, to properly advice and support their clients, SMPs need to be highly qualified and well trained. EFAA for SMEs will contribute to the consultation just launched by the European Commission on the Regulation of Professional Services.

The recognition of the value of our organisation’s work is widening. This is illustrated by our recent admission as a network partner of IFAC, with which we will continue to work towards the development and visibility of our profession, even as we continue to provide constant support for SMEs


Yours sincerely,

Salvador Marin
EFAA President

 

EFAA President's Activities

 

March 1, EWEUE, Formalisation of Status as Association
Salvador Marín attended the Early Warning Europe Network meeting formalizing the Statutes of Association. He highlighted the role of accountants in Early Warning.
.


March 2021, Edinburgh Group Meeting
Salvador Marin and Paul Thompson, EFAA Director joined the Edinburgh Group’s first meeting of the 2021. IFAC Leadership including President Alan Johnson and CEO Kevin Dancey presented and stressed the growing importance of accountants in advising on and preparing the non-financial reports of SMEs. Salvador Marín emphasized the role of EFAA for SMEs as the big voice for SMPs and SMEs in UE and invited all EG members to attend EFAA’s International Conference.

For more information: Please contact Salvador Marín

 

EFAA for SMEs Becomes an IFAC Network Partner

 


EFAA for SMEs is now an IFAC Network Partner. The Boards of both the International Federation of Accountants (IFAC) and of EFAA for SMEs have approved the Memorandum of Understanding between the two organisations, which has now been signed. It regulates our relationship and coordination. The MoU foresees that the two organisations identify and regularly review those areas of strategic interest where their activities need to be coordinated. EFAA President Salvador Marin says: “I strongly believe that this will reinforce the role which EFAA for SMEs plays as the voice of small- and medium-sized practices (SMPs).”

For more information: Please contact Salvador Marín 

 

SAVE THE DATE 2021: EFAA International Conference, 24-25 June

 


Small- and Medium-Small- and Medium-Sized Practices Post COVID-19 stand to play a crucial role in helping SMEs recover from the coronavirus crisis, build their resilience, and ensure their digital and sustainable transition. For SMPs to be effective in this role will demand they be smarter, stronger, and sustainable. SMPs will need to transform their practices by accelerating the adoption of digital technologies and broadening their services. New services may include advisory services related to early warning, insolvency, and sustainability as well as accounting services that include sustainability and non-financial reporting. The SMPs role as trusted advisor to their SME clients will grow ever more important. The format of the meeting, whether hybrid or fully virtual, will be decided in early April and posted here.

For more information: Please contact Sara Zambelli

 

REGISTER: EFAA-IFAC Webinar – Future of SMPs: Lessons from the Crisis & Practice Transformation, Tuesday 30 March

 



Having recently signed a Memorandum of Understanding with IFAC and become a network partner, EFAA for SMEs is pleased to announce a joint event for members and key stakeholders on the Future of SMPs: Lessons from the Crisis & Practice Transformation. The coronavirus pandemic has highlighted the need for SMPs to transform their practices to survive and succeed. This transformation demands the rapid adoption of digital technologies and business diversification through the offering of new services. Salvador Marin, EFAA President will present key lessons for SMPs arising from the crisis including the need to embrace change. Christopher Arnold, Head of SME/SMP and Research at the International Federation of Accountants (IFAC), Monica Foerster, a partner at Confidor, an accounting, tax and law firm in Brazil and Chair of IFAC’s SMP Advisory Group and Alex Peal, a partner and Head of Audit & Assurance at James Cowper Kreston a SMP accounting practice based in England, will then show how SMPs can make this transformation using IFAC’s ‘Practice Transformation Action Plan – A Roadmap to the Future’ as a guide. Participants will have the opportunity to pose questions. Please register here.

For more information: Please contact Sara Zambelli

 

EFAA for SMEs Participates in Webinar on Role of Accountants in Early Warning

 

EFAA Board member Marcus Tuschen, from member organization DStV, represented EFAA at a webinar hosted by Early Warning Europe (EWE), of which EFAA is a member, on the role of accountants in early warning for SMEs. Marcus joined representatives from Accountancy Europe and ACCA in the panel discussion and highlighted EFAA’s recently published short paper, endorsed by EWE, on the crucial role EFAA and SMPs can play in early warning for SMEs, ranging from advice on business continuity through to spotting the initial signs of impending difficulty.

For more information: Please contact Salvador Marín

 

Commission Publishes Roadmap on Update of Reform Recommendations for Regulation in Professional Services 

 

Within the framework of the better regulation agenda, the Commission has published the Roadmap “Update of the reform recommendations for regulation in professional services” which is open for consultation until 1 April 2021. It will address the regulation of the professional services including legal services, accounting, patent attorneys, and notaries. The aim of the initiative is to update the 2017 recommendations taking into account the latest developments in markets and services as well as developments in Member States’ regulatory frameworks. It will also focus on aspects such as digitalisation and COVID-19 implications. EFAA’s Professional Regulation Expert Group will convene to discuss EFAA’s response.

For more information: Please contact Sara Zambelli

 

EFRAG Publishes Reports on Development of EU Sustainability Reporting Standards

 

EFRAG has published two reports prepared in response to the mandates given by the European Commission on 25 June 2020. One report sets out recommendations to the European Commission for the elaboration of possible EU sustainability reporting standards​ and the other possible changes to EFRAG's governance and funding if it were to become the EU sustainability reporting standard setter​. The former report - developed by the multistakeholder Task Force that included Esther Ortiz, a member of EFAA’s Accounting Expert Group, as a member - proposes a roadmap for the development of a comprehensive set of EU sustainability reporting standards. The second report, to which EFAA provided input, proposes reforms to EFRAG’s governance structure to ensure that future EU sustainability reporting standards would be developed using an inclusive and rigorous process. EFAA is pleased to see careful consideration given to SMEs and SMPs in both reports. See the complete news from EFRAG here and a press release from the European Commission here.

Meanwhile on the global stage IFAC has announced its support for steps taken by the IFRS Foundation in its ongoing consideration of whether to establish a new Sustainability Standards Board (SSB) alongside the IASB and under the existing governance structure of the IFRS Foundation. In its statement IFAC agrees with the Trustees’ strategic views that the new SSB should focus on information material to decisions of investors and other providers of capital and that the new board would initially focus its efforts on climate-related reporting, while also working toward meeting the information needs of investors on other ESG (environmental, social and governance) matters. IFAC CEO Kevin Dancey said, “IFAC continues to support the ongoing rationalization of a coherent global system. The IFRS Foundation is uniquely qualified and positioned to lead here, including engagement with existing sustainability-related initiatives and standard setters from key jurisdictions. IFAC looks forward to providing input to the forthcoming IFRS Foundation Constitution consultation and encourages our member bodies and stakeholders to take an active interest in these next steps.” EFAA’s position, as expressed in its response to the IFRS Foundation Consultation Paper on Sustainability Reporting, is broadly aligned with IFAC’s position.

Sustainability reporting is growing quickly in popularity. In this article read how the Spanish Premier Liga football clubs have embraced it. SMPs stand to capitalize on the sustainable transition of the EU economy. In this article read about how sustainability creates ways for SMPs to grow their business and further serve SME clients.

For more information: Please contact Paul Thompson

 

COVID-19: Updated Guidance for SMPs

 

 

To help SMPs and their SME clients come through the COVID-19 crisis stronger, smarter and sustainable EFAA has a specially curated list of free guidance here. This guidance will enable SMPs to better manage their practices and provide high quality services to their SME clients. This list was updated on 15 February 2021.

ACCA have launched ‘Practice Connect’, a new online hub specifically designed to support the SMP community, that provides a breadth of useful resources - from podcasts, papers, videos, articles and guides  to help SMPs grow,  navigate digital transformation, and train and develop their teams.  The ACCA Practice Connect hub has a Network and Events section here that will be populated with forthcoming events and webinars relevant for SMPs. The hub also includes the Practice Room—starting this month a series of virtual discussion sessions, hosted by ACCA SMP members who run their own practice, covering key themes and hot topics for the SMP community. 

For more information: Please contact Paul Thompson

 

Commission Issues Roadmap for Business Taxation

 

On 4 March 2021 the Commission published the roadmap Business taxation for the 21st century with a deadline for responses of 1 April 2021. The Commission is taking stock of the discussion in international fora on reforming the international tax system and present its vision for a way forward to ensure that the EU business taxation system fits the modern economy. Publication of the communication was postponed to Q3 2021 due to the delay of the work at OECD level. The communication will should include recommendations for Member States. DG TAXUD is not planning additional regulations or directive.

For more information: Please contact Paul Thompson

 

EFAA for SMEs Director and Digital Working Group Chair Present to SMPs Across Eastern Partnership and Balkans

 

On 4 March 2021, within the framework of the European Union-World Bank joint Financial Inclusion and Accountability Project, the World Bank held an online meeting on “Future of SMPs: Digital Transformation”. The meeting is part of webinar series, launched by the World Bank in late 2020, to build the capacity of Georgian SMPs during the pandemic and beyond. The World Bank’s Europe and Central Asia office invited SMPs from across the Eastern Partnership and Western Balkans were also invited to attend and over 170 duly participated.  At the meeting, Paul Thompson, EFAA Director and Martin de Bie, Chair, EFAA Digital Working Group, explained why SMPs must embrace digital transformation and how they set about this transformation. Read more here.

For more information: Please contact Paul Thompson

 

 

 

 

Member Use, Feedback and Contributions 

Please share this newsletter with colleagues. Members are welcome to translate and reproduce extracts from this newsletter for their own communication purposes while acknowledging this newsletter as the source.

The next issue is slated for end of March 2021. We welcome feedback on how to improve this newsletter as well as contributions from our members, especially initiatives that other EFAA members might be keen to know about.

Please contact Sara Zambelli / Paul Thompson

 

 

 

 

 

 

2021

23 March (11:00-12:30 CET): ACCA – SMEunited – European Bank Online Conference “The role of public procurement in supporting SMEs towards sustainable recovery” - REGISTER HERE


25 March / 29 March: IESBA Global Webinars on PIE ED – REGISTER HERE for 25 March or HERE for 29 March [NEW]


30 March (14:00–15:00 CET): IFAC-EFAA  - webinar Future of SMPs: Lessons from the Crisis and Practice Transformation - REGISTER HERE [NEW]


24-25 June - EFAA International Conference and EFAA Annual General Meeting [SAVE THE DATE]
 

 

Please note hyperlinked text to further information. 
If you have any events to add please email Sara Zambelli

 

 

 

 

 

Guidance - How SMPs Can Digitalize

ACCA’s Practice Connect hub includes these resources to help SMPs digitalize their practices:

 

 

 

 

@EFAAforSMEs

EFAA.com

 

 

 

Please follow the EFAA Twitter feed for regular and relevant news posted daily here.
Join EFAA’s Digital Community here by emailing Martin de Bie or Paul Thompson. We encourage EFAA member organisations and other interested parties to join the EFAA Member Forum to share information and discuss developments.

Latest From Brussels Copyright © 2021 European Federation of Accountants and Auditors for SMEs. All rights reserved.

European Federation of Accountants and Auditors for SMEs
Rue Jacques de Lalaing 4   B-1040 Brussels   Belgium
T +32 2 736  88 86   F +32 2 736 29 64   www.efaa.com

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Latest From Brussels | February 2021 N° 3

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Foreword from the President - Salvador Marín

Member Use, Feedback and Contributions
Upcoming Events
EFAA Digital – Recommended Reading

 

 

 

Dear Members and Friends of EFAA,

Save Thursday 24 June in your calendar, either to travel to Madrid or to attend virtually the EFAA International Conference 2021! In either case, it will be a key event where the future of small- and medium-sized accountancy practices post COVID-19 will be discussed as well as how SMPs and their SME clients can become smarter, stronger and sustainable.

I strongly believe that SMPs play a key role in society and that this role is becoming even greater in the current times. Therefore, it is essential that our SMPs keep up to date, that they become digitally savvy and sustainable. This will enable SMPs, not only to maintain their role as the trusted advisors of their SME clients, but also to greatly contribute to a speedy economic recovery. The advisory services provided by SMPs should extend beyond their traditional compliance offerings to cover also advisory services including business counselling on IP rights, the digital transition and sustainability. Such an extended advisory role would contribute greatly to the resilience and stability of SMEs. In this context, the EUIPO-EFAA webinar on 3 February 2021 was an excellent opportunity to raise awareness on the potential role of SMPs in relation to IP..

EFAA for SMEs will continue to represent the voice of SMPs and work tirelessly towards making this voice ever stronger and heard clearly at all levels of decision-making.


Yours sincerely,

Salvador Marin
EFAA President

 

EFAA President's Activities

 

Digital Conference Impact of the pandemic on the Economy and Profession in Spain and Portugal, 28 February
Salvador Marin, EFAA President, participated in this conference together with Paula Franco, OCC Bastonaria and Valentin Pich, President of Economistas. President Marín stressed that both small- and medium-sized accountancy practices and medium-sized companies are changing and adapting their business practices in this period, with more emphasis being given to resilience, to training and to investing in digitalisation.

SAFA International Conference 2021 - Digitalization of Accounting & Auditing Practices: Challenges and Opportunities to Protect Public Interest, 5-6 February 2021
Salvador Marìn participated in a panel discussion on “Developing the Accountancy Profession in Digital Era: Role of Regional Bodies” together with Kevin Dancey, IFAC CEO, A.K.M. Delwer Hussain FCM, President, SAFA, Mr. Teerachai Arunruangsirilert, AFA Deputy President, Ms. Alta Prinsloo Chief Executive Officer, PAFA [read more here].

For more information: Please contact Salvador Marín

 

EFAA International Conference - SAVE THE DATE: 24 June 2021

 


The EFAA International Conference 2021 will take place on 24 June 2021. The format of the meeting, whether hybrid or fully virtual will be decided as soon as possible.

Small- and Medium-Sized Practices Post COVID-19 stand to play a crucial role in helping SMEs recover from the coronavirus crisis, build their resilience and ensure their digital and sustainable transition. For them to be effective in this role will demand they be smarter, stronger and sustainable. SMPs will need to transform their practices by accelerating the adoption of digital technologies and broadening their services. New services may include advisory services related to early warning, insolvency, and sustainability as well as accounting services that include sustainability and non-financial reporting. The SMPs role as trusted advisor to their SME clients will grow ever more important.

 

EFAA-EUIPO joint event on Intellectual Property Rigths

 



On 3 February, EUIPO and EFAA co-hosted a short webinar to provide some key information on EU IP rights and on the key role accountants can play in the provision of advisory services for their SME clients. SMPs are the trusted advisors of their SME clients and their capability to advise their SME client in several aspects of their business activities is key to helping SMEs remain competitive and grow. According to the EUIPO SME scoreboard conducted in 2019, accountants are often the only advisors of small and micro enterprises. They thus play a key role in the business life of SMEs. 
 
Advisory services become even more relevant in view of the increasing importance of intangibles to sustainable value creation and of the fact that some SMEs will be required or willing to report non-financial information. SMPs typically prepare the financial reports of SMEs and so will likely be the preferred drafters of NFR for these SMEs.

The event was for members only, but slides and relevant information can be shared with potentially interested readers upon request.

For more information: Please contact Sara Zambelli

 

Update on Non-Financial Reporting and the Opportunities for SMPs

 

Between 13 and 22 January 2021, the Project Task Force on preparatory work for the elaboration of possible EU non-financial reporting standards (PTF-NFRS) of the European Lab @EFRAG held seven joint online outreach events. The objective of these events was to gather stakeholders’ views from different countries on the tentative proposals of the PTF-NFRS to the European Commission. The events' recordings are now available. In this article ‘Countdown for the reform that will overhaul companies’ sustainability reporting obligations in Europe’ read what we can expect on sustainability reporting and related themes in 2021. SMPs stand to capitalize on the sustainable transition of the EU economy. In this article read about how sustainability creates ways for SMPs to grow their business and further serve SME clients. 

For more information: Please contact Paul Thompson

 

COVID-19: Updated Guidance for SMPs

 

 

To help SMPs and their SME clients come through the COVID-19 crisis stronger, smarter and sustainable EFAA has a specially curated list of free guidance here. This guidance will enable SMPs to better manage their practices and provide high quality services to their SME clients. This list was updated on 15 February 2021.

In this article read how Australian accountants, including SMPs, are resetting the way they operate and the services they offer.

For more information: Please contact Paul Thompson

 

Commission Publishes Report on PIE Audit Market

 

The European Commission has published a report summarising its findings from its assessment of developments in EU market for carrying out statutory audits of public-interest entities (PIEs). The report, which spans the period 2015 – 2018, highlights the following: a reduction in the number of statutory auditors and audit firms in the EU resulting in less choice for PIEs; a reduction in the number of PIE statutory audits; and continued concentration of the PIE audit market with the Big Four firms dominating in most countries. The report notes that measures to reinforce auditor independence, such as mandatory auditor rotation and limitations on the provision of non-audit services, may have exacerbated audit market concentration by further limiting the choice of PIE statutory auditors. The report also notes difficulties in assessing audit quality due to various factors including inadequate monitoring of high-risk audited entities and shortcomings in audit firms’ quality control systems. The Commission recently launched a study into the effects of the 2014 EU Audit Reform that will help inform a future review into how to enhance transparency, audit quality and competition in the audit market, especially for PIEs. 

For more information: Please contact Paul Thompson

 

IFAC Invites Members to Use PAO Digital Assessment Tool

 

IFAC recently teamed up with cloudThing to offer its membership a free Digital Assessment Tool that would assess an organization’s Digital Readiness ahead of a digital transformation project. cloudThing’s PAO Digital Assessment tool has been designed to measure how digitally ‘mature’ an organization is, or where they already are on their individual digital transformation journey. The Tool will be open for PAOs to complete until 31 March 2021. During this time, IFAC's main objective is to help PAOs complete the tool and understand, interpret, and prioritize their results. The results, (after being thoroughly anonymized) will allow IFAC, working in conjunction with cloudThing, to assess the digital readiness of the accountancy profession as a whole and strategize future support. Read more here.

For more information: Please contact Paul Thompson

 

Developments in International Standard Setting

 

Financial Reporting
Paul Thompson, EFAA Director and Jose Maria Hinojal, a member of EFAA’s Accounting Expert Group participated in the SME Implementation Group’s (SMEIG) virtual public meeting on 4-5 February 2021. The agenda papers and meeting recording (it was live streamed) are here. EFAA responded to the Request for Information: Comprehensive Review of the IFRS for SMEs Standard in 2020 – see our letter here (#19). While the standard is not widely used in the EU, the EFAA research suggests it does influence the setting of national financial reporting standards and the hope is that the standard might evolve so as to become more amenable to its use in the EU.

Sustainability Reporting
IFAC has welcomed the announcement from the IFRS Foundation Trustees to take further, timely steps to assess the possibility of establishing a new Sustainability Standards Board (SSB). IFAC believes that there is “broad demand for the IFRS Foundation to play a role” and a SSB is best positioned to lead the ongoing rationalization of a coherent global system for reporting requirements addressing enterprise value creation, sustainable development, and evolving stakeholder expectations. IFAC agrees with the Trustees’ conclusion that moving with urgency is a key factor for success and that this can be accomplished by leveraging the expertise and standards that already exist. EFAA responded to the recent IFRS consultation on sustainability reporting - our letter can be seen here (#576).

For more information: Please contact Paul Thompson

 

EFAA issues Position Statement on Sustainable Corporate Governance

 

The Commission has launched a consultation on a Proposal for an Initiative on Sustainable Corporate Governance, an initiative it first announced in the EU Green Deal and the Commission’s Communication on the (COVID-19) Recovery Plan. The objective is that sustainability should be further embedded into the corporate governance framework. Sustainability in corporate governance encompasses encouraging businesses to consider environmental (including climate, biodiversity), social, human, and economic impact in their business decisions, and to focus on long-term sustainable value creation rather than short-term financial value. The Commission believes this will help companies recover as well as support their long-term resilience and development. EFAA has responded to the consultation and issued a position statement. EFAA for SMEs underlines the necessity to make sure that any new EU legal framework which is developed for businesses be adapted to the specificities of SMEs. The use of the “think-small first” principle and smart regulation should guide the European Commission in every assessment in this respect.

For more information: Please contact Sara Zambelli

 

EFAA Responds to Commission’s Proposed Regulation on Digital Resilience of Financial Sector Entities

 

In our comment on the proposed regulation on digital operational resilience for the financial sector (DORA), we urge the Commission to consider exempting SMPs that do not audit financial entities and to do more to make the regulation proportionate by applying the “think small first” principle. EFAA for SMEs also stresses the key role which the accountancy profession plays in business and society through the professional services it delivers to SMEs. This role often extends to advising SMEs on their digitalization, and thus contributes to the resilience and stability of SMEs. 

For more information: Please contact Sara Zambelli

 

 

 

 

Member Use, Feedback and Contributions 

Please share this newsletter with colleagues. Members are welcome to translate and reproduce extracts from this newsletter for their own communication purposes while acknowledging this newsletter as the source.

The next issue is slated for end of February 2021. We welcome feedback on how to improve this newsletter as well as contributions from our members, especially initiatives that other EFAA members might be keen to know about.

Please contact Sara Zambelli / Paul Thompson

 

 

 

 

 

 

2020

24 February (11:00-12:30 CET) - ACCA-PwC Webinar ‘Diversity, Inclusion & Belonging’ - REGISTER HERE


24-25 June 2021 - EFAA International Conference and EFAA Annual General Meeting [SAVE THE DATE]

 

Please note hyperlinked text to further information. 
If you have any events to add please email Sara Zambelli

 

 

 

 

 

Guidance - How SMPs Can Protect Practice and Clients

According to this US article cyber breaches have become more common threats for businesses. The COVID-19 pandemic accelerated the digitalization of many companies and a shift to remote working. This has caused a significant increase in cybercrime in 2020 compared to 2019. Furthermore, SMEs were often the victims of cyberattacks. The article looks at the new trends, patterns and hacks we can expect in 2021 and how SMPs can protect their practice and their clients from cyberattacks.
 

 

 

 

 

@EFAAforSMEs

EFAA.com

 

 

 

Please follow the EFAA Twitter feed for regular and relevant news posted daily here.
Join EFAA’s Digital Community here by emailing Martin de Bie or Paul Thompson. We encourage EFAA member organisations and other interested parties to join the EFAA Member Forum to share information and discuss developments.

Latest From Brussels Copyright © 2021 European Federation of Accountants and Auditors for SMEs. All rights reserved.

European Federation of Accountants and Auditors for SMEs
Rue Jacques de Lalaing 4   B-1040 Brussels   Belgium
T +32 2 736  88 86   F +32 2 736 29 64   www.efaa.com

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Latest From Brussels | January 2021 N° 2

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Foreword from the President - Salvador Marín

Member Use, Feedback and Contributions
Upcoming Events
EFAA Digital – Recommended Reading

 

 

 

Dear Members and Friends of EFAA,

Several consultations are currently open on key topics ranging from Digital to Insolvency rules and Sustainable Corporate Governance. Through all these consultations, EFAA stresses that the Commission should remember to apply the “think small first” principle and take into account the crucial role which micro and small enterprises play in the economy. We also emphasise constantly that, over the years, small- and medium-sized accountancy practices have ensured proper compliance with the rules governing fiscal matters, anti-money laundering, corporate governance and reporting and that the high degree of competence of SMPs in such matters is the consequence of the demanding professional qualifications and high ethical standards that characterise the accountancy profession.

SMPs are also the best placed to help identify the needs of SMEs as well as any early signs of distress in their business. In view of this and the other important contributions to the health of the economy mentioned above, the need to maintain a level playing field in the accountancy profession should always be kept in mind while seeking the development of the single market for services.

The COVID19 crisis is accelerating the digital changes that were already ongoing. SMPs must adapt nimbly and become smarter, stronger and more sustainable. This will be discussed in depth at the EFAA International Conference 2021 on 24 June, SAVE THE DATE in your calendar!,


Yours sincerely,

Salvador Marin
EFAA President

 

EFAA President's Activities

 

Interview with Milieu Law and Policy Consulting , 14 January 2021
Salvador Marín and Paul Thopmson represented EFAA for SMEs to discuss impact of the latest reform of the Audit Directive and Regulation of 2014 on the European audit market.

For more information: Please contact Salvador Marín

 

EFAA Participates in EFRAG Outreach Events on Non-Financial Reporting

 

The EFRAG Project Task Force on non-financial reporting standards (PTF-NFRS), on which EFAA is represented through Esther Ortiz, held a series of joint online outreach events between 13 and 22 January 2021. Salvador Marin moderated the Spanish focus webinar, the first of the series, with Esther presenting and Paul Thompson moderated the closing remarks. Over 1,300 attended the online webinar, by far the most of all the outreach events. The main discussion for these webinars took the form of a series of roundtable discussions. Salvador also represented EFAA at the outreach webinar for European Organisations and Other European Countries. The outreach document of the PTF-NFRS presented the approach and possible orientations emerging from the PTF-NFRS’s ongoing work and served as a basis for the roundtable discussions at the events. The PTF-NFRS expects to publish its final report in late February. In 2021 we can expect considerable development in NFR and some foresee ‘sustainability’ reporting replacing ‘NFR’.


For more information: Please contact secretariat@efaa.com

 

COVID-19: Guidance for SMPs and Related News and Insights

 

 

To help SMPs and their SME clients come through the COVID-19 crisis stronger, smarter and sustainable EFAA has a specially curated list of free guidance here. This guidance will enable SMPs to better manage their practices and provide high quality services to their SME clients. This list was updated on 11 January 2021

According to the ACCA and IMA Global Economic Conditions Survey (GECS) published on 26 January, Accountants and finance professional experts say economic confidence in 2020 Q4 has stalled and remains fragile heading into 2021.

For more information: Please contact Paul Thompson

 

EFAA President and Director Present at IFAC Meeting

 

Salvador Marin and Paul Thompson presented on non-financial information (NFI) to the Small and Medium Practices Advisory Group (SMPAG) of the International Federation of Accountants (IFAC) at its meeting of 28 January 2021. Salvador gave an overview of EFAA’s activities in relation to NFI and shared practical insights from his role as partner of an SMP providing advice on NFI to SME clients as well as helping them with their non-financial reporting (NFR). Paul provided a timely update on NFR developments in Europe, in particular the review of the NFRD and the work of the EFRAG PTF-NFRS preparing for the development of EU NFR standards (see above).
Recently the IFAC Gateway has featured two articles of relevance to SMPs: Challenges & Opportunities for Sole Practitioners—and How PAOs Can Help and KYC – The Right Tools for the Job. Furthermore, IFAC with ICAEW have just released the fourth instalment in its Anti-Money Laundering: The Basics educational series: Instalment 4: Asset Transfers. This 6-part series is intended to help accountants, including SMPs, understand how money laundering works, the risks they face, and what they can do to mitigate these risks and make a positive contribution to the public interest. And finally this article on the future of SMPs provides a short list of typical services they can provide SME clients, in both normal times and times of crisis, that will add extra value to the relationship.

For more information: Please contact Paul Thompson

 

Developments in International Standard Setting

 

Assurance, Related Services and Quality Management
Paul Thompson has been appointed as second EFAA representative (joining Hysen Cela, IEKA) on the International Auditing and Assurance Standards Board (IAASB) and International Ethics Standards Board for Accountants (IESBA) Consultative Advisory Groups (CAGs). The CAGs next meet in March 2021 and audit of less complex entities (LCEs) and definition of public interest entities (PIEs), both critical projects for SMPs and SMEs, are likely to be key agenda items. 
The IAASB is looking for highly qualified volunteers to serve as Board members for an initial term of up to 3 years, commencing 1 January 2022. For more information please see the Call for Nominations for IAASB in 2022, also available in French and Spanish. The deadline for submitting applications is 15 February 2021. . 


Ethics
The IESBA is also looking for highly qualified individuals to serve as Board members for an initial term of service of up to 3 years, commencing 1 January 2022. For more information and to learn how to submit an application before the 15 February 2021 deadline, please review the Call for Nominations for IESBA in 2022, also available in French and Spanish.
In this IFAC Gateway article it is argued that in response to the COVID-19 pandemic professional accountants must now be vigilant of the heighted risks that will arise out of the pandemic and continue to ensure that their actions are anchored by the fundamental principles of integrity, objectivity, professional competence and due care, confidentiality, and professional behavior set out in the IESBA Code.
On 26 January 2021, the Staff of UK Financial Reporting Council (FRC) and the IESBA jointly released the publication, Ethical and Auditing Implications Arising from Government-Backed COVID-19 Business Support Schemes which highlights ethical and auditing implications arising from government-backed business support programs which have been utilized at unprecedented levels during the COVID-19 pandemic. 


Financial Reporting
At its meeting of 14-16 December 2021, the International Accounting Standards Board (IASB) focused on the feedback on the Request for Information on the second comprehensive review of the IFRS for SMEs Standard. EFAA responded to the consultation here. The recording reveals that the IASB decided to seek direction from the SME Implementation Group (SMEIG) which will hold a virtual public meeting on 4-5 February 2021. Paul Thompson, EFAA Director and Jose Maria Hinojal, member of EFAA’s accounting Expert Group (AEG) will participate in the meeting. 

Integrated Reporting
On 19 January 2021, the International Integrated Reporting Council (IIRC) published revisions to the International Framework to enable more decision-useful reporting. The revisions, the first since the Framework was originally published in 2013, are the result of extensive market consultation with 1,470 individuals in 55 jurisdictions. The IIRC says: “The consultation demonstrated that the conceptual thinking and principles of the Framework remain fit for purpose and robust, as evidenced by the 2,500 organizations in over 70 countries that use it. However, analysis of the feedback by the IIRC’s Framework Panel identified opportunities to clarify concepts, simplify guidance for report preparers and underpin better quality integrated reports”. The revisions, set out via a webinar here, focus on a simplification of the required statement of responsibility for the integrated report; improved insight into the quality and integrity of the underlying reporting process; a clearer distinction between outputs and outcomes; and a greater emphasis on the balanced reporting of outcomes and value preservation and erosion scenarios. Integrated Reporting is likely to be factored into any future EU NFRS. EFAA is a partner in INTEREST, an ERASMUS+ project to develop a framework, a guide and training modules for applying the IIRC Framework to SMEs. Luca Brusati, EFAA Special Advisor, and Paul Thompson represent EFAA on the project team. 

For more information: Please contact Paul Thompson

 

Commission Consultations on Insolvency and Sustainable Corporate Governance

 

The European Commission has launched a consultation on enhancing the convergence of insolvency laws to address major discrepancies in national substantive insolvency laws of the Member States. The initiative focuses on corporate insolvency (i.e., non-bank insolvency), including companies, partnerships and entrepreneurs and complements the Directive on Restructuring and Insolvency. EFAA, with guidance from its EU Professional Regulation Expert Group, plans to respond to parts of this consultation, in particular the section on insolvency practitioners given many accountants serve as insolvency practitioners. Second, the Commission has launched a consultation on a Proposal for an Initiative on Sustainable Corporate Governance. The initiative was announced in the European Green Deal and the Commission’s Communication on the (COVID-19) Recovery Plan. The objective is that sustainability should be further embedded into the corporate governance framework. Sustainability in corporate governance encompasses encouraging businesses to consider environmental (including climate, biodiversity), social, human, and economic impact in their business decisions, and to focus on long-term sustainable value creation rather than short-term financial value. The Commission believes this will help companies recover as well as support their long-term resilience and development. 
The European Commission is also consulting on the way to establish a European single access point (ESAP) for companies’ financial and sustainable investment-related information made public pursuant to EU legislation. The EC seeks general and technical views. 

For more information: Please contact Paul Thompson

 

EFAA Director Chairs Georgian Reporting Awards Panel

 

Best Annual Report and Transparency Awards (BARTA) celebrates the achievements of Georgian companies that provide high quality and transparent corporate reporting. EFAA’s Director Paul Thompson chairs the panel of judges that selected the winners who received their awards via this virtual awards event held on 16 December 2020. In this short video learn how these awards are key to helping the country’s economic development. You can find the press release announcing the BARTA 2020 award winners here.

For more information: Please contact Paul Thompson

 

 

 

 

Member Use, Feedback and Contributions 

Please share this newsletter with colleagues. Members are welcome to translate and reproduce extracts from this newsletter for their own communication purposes while acknowledging this newsletter as the source.

The next issue is slated for mid-February 2021. We welcome feedback on how to improve this newsletter as well as contributions from our members, especially initiatives that other EFAA members might be keen to know about.

Please contact Sara Zambelli / Paul Thompson

 

 

 

 

 

 

2020

24 February (11:00-12:30 CET) - ACCA-PwC Webinar ‘Diversity, Inclusion & Belonging’ - REGISTER HERE


24-25 June 2021 - EFAA International Conference and EFAA Annual General Meeting [SAVE THE DATE]

 

Please note hyperlinked text to further information. 
If you have any events to add please email Sara Zambelli

 

 

 

 

 

Commission Consults on Digital Proposals
The Commission has launched public consultations on the recently published proposals on the Digital Services Act (DSA) 2020/0361 (COD) (consultation link) and Digital Markets Act (DMA) 2020/0374 (COD) (consultation link). SMEunited has published a press release welcoming the proposals which they say are a step in the right direction to make digital markets more open for SMEs. EFAA supports this view. Furthermore, SMEunited replied to the first Commission’s consultation by submitting a position paper. EFAA, like SMEunited, sees these initiatives as a priority as they will shape the future of the EU Digital Single Market and will provide input to SMEunited as it drafts its position paper on DSA and DMA and response to the consultation (deadline of 12 February 2021).

Guidance on Remote Collaboration
Group projects are easier when you are physically together, but it is still possible to work together effectively if you have the right tools such as OneDrive and Teams. Read more here.

 

 

 

 

@EFAAforSMEs

EFAA.com

 

 

 

Please follow the EFAA Twitter feed for regular and relevant news posted daily here.
Join EFAA’s Digital Community here by emailing Martin de Bie or Paul Thompson. We encourage EFAA member organisations and other interested parties to join the EFAA Member Forum to share information and discuss developments.

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Latest From Brussels | January 2021 N° 1

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Foreword from the President - Salvador Marín

Member Use, Feedback and Contributions
Upcoming Events
EFAA Digital – Recommended Reading

 

 

 

Dear Members and Friends of EFAA,

First of all I would like to wish you a Happy New Year! 

In the current crisis, early warning, restructuring and insolvency rules are becoming even more relevant and the role SMPs play as trusted advisor to their SME clients grows ever greater, not only in connection with the topics just mentioned but also regarding sustainability and the relevance of non-financial information.
 
EFAA agrees with the importance of internationally recognised sustainability reporting standards. However, these standards must be designed from the bottom up, using the ‘think small first’ principle, such that they are simple and straightforward as well as scalable to suit larger entities. EFAA remains involved in ongoing discussions concerning the possible development of an EU NFR standard, particularly within EFRAG, which will play an essential role in this matter. We consider that a strong trickle-down effect is to be expected from NFR, especially in the supply chain. The involvement of SMPs and SMEs in such discussions is a key priority.
 
With your support, EFAA remains, as ever, unfailingly committed to making sure that the voice of SMPs is heard loud and clear in all relevant forums.


Yours sincerely,

Salvador Marin
EFAA President

 

EFAA's President Activities

 

Early Warning Europe Network, 10 and 15 December 2020 
Salvador Marín, EFAA President, participated in two meetings on the “Early Warning Europe Network”. The project is extremely important for SMEs, who are SMPs’ main clients. Undoubtedly, SMPs have extensive knowledge of their clients’ needs and of the early warning mechanisms they need. EFAA for SMEs will be participating in the network.

EFRAG meeting with member organisations, 11 December 2020
President Marín stressed the importance of increasing the representation of SMPs and SMEs in EFRAG’s governance. He also highlighted that the "think small first" principle must always be taken into account as well as the trickle-down effect that EC regulations and projects have for SMEs and SMPs. He also highlighted the need to apply “smart regulation”. Marín stressed that the voice of SMPs and SMEs should be broadened, since these are the backbone of the economy in Europe.

Presentation of the Guide about security and strategic intelligence for SMEs, 14 December 2020 
Salvador Marín contributed to the discussion in his role as co-author and as president of EFAA for SMEs. Marín stressed that SMEs are the backbone of the European economy and that they need to grow, gain size and continuously improve their professional skills. Salvador Marín highlighted that there is usually a positive correlation between the most competitive companies and those that use security tools and strategic intelligence. He also emphasised the role that SMPs and medium-sized professional companies can play to collaborate with SMEs on this.

EFRAG´s General Assembly , 15 December 2020
Salvador Marín represented EFAA for SMEs at the EFRAG General Assembly. He stressed the necessity of having organizations representing SMPs and SMEs contribute to the governance, not least in view of the key role they will play in the post-covid European economy.

XI Edition of the Audit meeting, 17 December 2020 - Spain
After having highlighted the important role that EFAA for SMEs plays, EFAA’s participation in decision-making processes and in European projects, such as Interest-EU, Salvador Marín spoke about the "Recent Developments in Non-Financial Reporting (NFR)" and the need for proportionality for SMEs.
Held in Spain, the event gathered more than 600 auditors and accountants. The event was also attended by the Spanish regulator and other relevant national and European speakers.

For more information: Please contact Salvador Marín

 

EFAA Responds to Public Consultation on EFRAG’s Future Governance

 

In late 2020, EFRAG Board President, Jean-Paul Gauzès, issued a Consultation Document inviting all interested stakeholders to contribute input to his preliminary proposals regarding changes to the governance structure and financing of EFRAG, given that the latter was entrusted with the development of EU non-financial reporting standards. In EFAA’s response to the Consultation Document, a follow-up consultation to a preliminary one conducted in October 2020, EFAA urges EFRAG to have significant SME and SMP representation irrespective of the outcome of the NFRD review (due in the coming month or so) and a robust nomination process to help ensure the EFRAG Board, its technical boards and technical expert groups (TEGs) have high quality members.

For more information: Please contact secretariat@efaa.com

 

Developments in Non-Financial Reporting: EFAA Responds to IFRS Consultation on Sustainability Reporting

 

EFAA responded to the IFRS Foundation Consultation Paper on Sustainability Reporting. The EFAA response to the IFRS consultation is included under news here and under publications here. It also appears with all others submitted on the IFRS website here. EFAA’s response expresses strong support for the IFRS Foundation establishing a new sustainability standards board alongside the IASB. EFAA also impressed on the need for this new SSB to coordinate closely with EU developments and to have substantial representation of SMEs and SMPs in view of the trickle-down and supply chain effects as well as the desire to ensure the development of scalable standards that will facilitate and encourage voluntary use of the standards by SMEs.

Earlier in December 2020, IFAC issued its response, reiterating the view expressed in September 2020 in their publication The Way Forward, that the IFRS Foundation should establish a new sustainability standards board alongside the IASB, to focus on reporting requirements that address enterprise value creation, and to deliver at speed by leveraging the expertise and standards that already exists. Since publishing its response to the IFRS Foundation, IFAC has jointly published the report ’Reporting on Enterprise Value, Illustrated with a Prototype Climate-Related Financial Disclosure Standard’, to serve as a valuable starting point for this IFRS initiative.

The EFRAG Project Task Force on non-financial reporting standards (PTF-NFRS), on which EFAA is represented through Esther Ortiz, expects to complete its preparatory work for the elaboration of possible EU NFRS with the publication of its final report in late January. The PTF-NFRS is holding a series of joint online outreach events scheduled between 13 and 22 January 2021. These online events will be the occasion to gather stakeholders’ views from different countries on the tentative proposals of the PTF-NFRS. Register here​ and read more here.

We can expect considerable developments in the areas of NFR and sustainability reporting in 2021. This article provides a good summary of these developments, this one a critique of developments in sustainability reporting, and this one on NFR and sustainable finance.
 
For more information: Please contact Paul Thompson

 

COVID-19: Guidance for SMPs and Related News and Insights

 

 

To help SMPs and their SME clients come through the COVID-19 crisis stronger, smarter and sustainable EFAA has a specially curated list of free guidance here. This guidance will enable SMPs to better manage their practices and provide high quality services to their SME clients. This list was updated on 11 January 2021

According to a new study by ACCA, Space to Grow, there are a number of innovative new business support models available to small businesses, providing a one-stop shop of support and facilitating their growth and ability to scale-up amid Covid-19 recovery. Traditionally, government initiatives and high street advice outlets provided a business support infrastructure for SMEs but Space to Grow examines how new and emerging business support models are being used to allow more SMEs to achieve rapid growth as well as to support business recovery post Covid-19. The report stresses that accountants and SMPs have an important role to play in this space, above and beyond their more traditional role in compliance. Start-ups and growth businesses need sound financial management and data as they start and grow their businesses. Accountants and SMPs can become growth partners, growing alongside their clients, and should explore new opportunities to work more closely with the developers of accelerator and incubator programmes. As the report notes accountants provide clients with the solid financials and forecast needed to enter incubation and acceleration programmes and pitch to investors. ACCA say that policymakers focused on supporting growth-oriented businesses need to do more to consider the role of finance professionals developing the start-up and small business support ecosystems.

For more information: Please contact Paul Thompson

 

IFAC Update

 

The International Federation of Accountants (IFAC) has released their latest Point of View (POV): Embracing a People-Centered ProfessionThe new publication explores the connection between the people in the accountancy profession, the core components of the profession (education, professional judgment, ethics, values) and the profession’s commitment to the public interest.  IFAC also examines the relationship between a strong focus on “human capital” and the ability to attract, challenge, and retain talented people throughout their careers.
IFAC, together with the ICAEW, has also released the third installment of a six-part anti-money laundering educational series Anti-Money Laundering: The Basics hereInstalment 3: Company Formation examines company formation, one of the services performed by professional accountants that is most susceptible to money laundering risk.

For more information: Please contact Paul Thompson

 

Developments in International Standard Setting

 

Assurance, Related Services and Quality Management
During its December 2020 meeting, the International Auditing and Assurance Standards Board (IAASB) held its first public discussions on the draft of a separate standard being developed for an audit of less complex entities and the official project proposal to complete and publish the draft standard for public consultation in 2021. The IAASB approved the project proposal and early draft. Following these decisions, the IAASB published a new communique detailing plans for the new standard, including current thinking on what the standard will look like, what entities it will apply to, and the development timeline. For additional information on the IAASB’s efforts to balance the needs of all its stakeholders by addressing complexity, understandability, scalability and proportionality in the International Standards on Auditing, please see its November 2020 communique. EFAA fully supports these efforts.
The IAASB has released its three quality management standards. The standards promote a robust, proactive, scalable and effective approach to quality management and mark a significant evolution of the existing quality control standards with the emphasis on quality ‘management’ rather than ‘control’, of engagements. EFAA continues to harbor some concerns over scalability, as initially expressed in our response to the exposure drafts in July 2019, but is pleased to see the IAASB’s intensive efforts to alleviate these concerns. The suite of standards become effective on 15 December 2022. Bases for Conclusions and factsheets to support the implementation of the new standards are available on the IAASB’s website. Additional support materials, some directed at SMPs, will be published in 2021.
The IAASB is looking for highly qualified volunteers to serve as Board members for an initial term of up to 3 years, commencing 1 January 2022. For more information please see the Call for Nominations for IAASB in 2022, also available in French and Spanish. The deadline for submitting applications is 15 February 2021. 


Ethics
The International Ethics Standards Board for Accountants (IESBA) is also looking for highly qualified individuals to serve as Board members for an initial term of service of up to 3 years, commencing 1 January 2022. For more information and to learn how to submit an application before the 15 February 2021 deadline, please review the Call for Nominations for IESBA in 2022, also available in French and Spanish.
The IESBA has released a Report, Ethics and Trust – Breaking New Ground summarizing the Board’s accomplishments from 1 June 2016 to 31 July 2020 including an update on the IESBA’s current projects and initiatives and efforts to promote awareness, adoption, and implementation of the International Code of Ethics for Professional Accountants (including International Independence Standards).  
On 16 December 2020 the Staff of the IESBA, the IAASB and the South African Independent Regulatory Board for Auditors (IRBA) jointly released the publication, Navigating the Heightened Risks of Fraud and Other Illicit Activities During the COVID-19 Pandemic, including Considerations for Auditing Financial Statements. The publication highlights the heightened risks of fraud arising from the disruptive and uncertain COVID-19 environment and the implications for professional accountants in business, including accountants in government, and professional accountants in public practice, including auditors. Concurrently, the Staff of the IESBA and Chartered Professional Accountants of Canada (CPA Canada) jointly released a Staff Alert, COVID-19 and Evolving Risks for Money Laundering, Terrorist Financing and Cybercrime. This document highlights the heightened risks of money laundering, terrorist financing and cybercrime in the COVID-19 environment and describes the implications for both professional accountants in business and public practice. Both documents can be found on the IESBA COVID-19 resource page.


Financial and Sustainability Reporting
The December 2020 IFRS for SMEs Update focuses on the feedback on the Request for Information on the second comprehensive review of the IFRS for SMEs Standard. EFAA responded to the consultation here. Paul Thompson, EFAA Director and Jose Maria Hinojal, member of EFAA’s accounting Expert Group (AEG) will participate in the public meeting of the SME Implementation Group (SMEIG) on 4-5 February 2021. 

For more information: Please contact Paul Thompson

 

Brexit Update: What the EU-UK Agreement Means for Europe’s SMPs

 

On 30 December 2020 the EU-UK agreement was signed – read the official press release here and the full details in multiple languages here. The UK’s departure from the EU after 47 years of EU membership means the UK has lost all the rights and benefits it had as an EU Member State, is no longer a part of the EU’s Single Market and Customs Union and is no longer covered by the EU’s international agreements. However, the agreement is a significant deal and provides the basis for a close and constructive relationship going forward. The EU Observer outlines the key points of the 1,000-page long agreement here and EU Politico provide a summary here.

What then does this mean for Europe’s SMPs? The deal offers no more than the EU-Canada agreement in terms of Mutual Recognition of Professional Qualifications (MRPQs), which allow workers such as accountants, doctors, engineers, and architects to work in member states other than where they qualified. The deal simply establishes a process by which regulators and industry bodies can work with each other to establish MRPQs in the future. Market access will depend on how this provision is implemented by member states’ industry and professional bodies. Some argue accountancy has proved more protectionist than many professions. For professions like accountancy the ability to work in another country temporarily is important. Fortunately, the deal includes a list of specified occupations, including accountancy, that are allowed visa-free travel for 90 days. 

For more information: Please contact Paul Thompson

 

 

 

 

Member Use, Feedback and Contributions 

Please share this newsletter with colleagues. Members are welcome to translate and reproduce extracts from this newsletter for their own communication purposes while acknowledging this newsletter as the source.

The next issue is slated for end of January 2021. We welcome feedback on how to improve this newsletter as well as contributions from our members, especially initiatives that other EFAA members might be keen to know about.

Please contact Sara Zambelli / Paul Thompson

 

 

 

 

 

 

2020

13-22 February - EFRAG PTF-NFRS online outreach events


24 February (11:00-12:30 CET) - ACCA-PwC Webinar ‘Diversity, Inclusion & Belonging’ - REGISTER HERE


4-25 June 2021 - EFAA Annual General Meeting and EFAA International Conference [SAVE THE DATE]

 

Please note hyperlinked text to further information. 
If you have any events to add please email Sara Zambelli

 

 

 

 

 

Commission Consults on Digital Proposals
The Commission has launched public consultations on the recently published proposals on the Digital Services Act (DSA) 2020/0361 (COD) (consultation link) and Digital Markets Act (DMA) 2020/0374 (COD) (consultation link). SMEunited has published a press release welcoming the proposals which they say are a step in the right direction to make digital markets more open for SMEs. EFAA supports this view. Furthermore, SMEunited replied to the first Commission’s consultation by submitting a position paper. EFAA, like SMEunited, sees these initiatives as a priority as they will shape the future of the EU Digital Single Market and will provide input to SMEunited as it drafts its position paper on DSA and DMA and response to the consultation (deadline of 12 February 2021).


 

 

 

Latest From Brussels | December 2020 N° 23

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Looking back, looking forward, thanking you and
wishing you season’s greetings

 

It goes without saying that COVID19 has seriously disrupted European societies and economies. EFAA for SMEs rapidly adapted its activities to keep providing valuable services to its members and to make the voice of small- and medium-sized practices (SMPs), now more important than ever in the current circumstances, better heard.

In this short issue, we wish to highlight some of our key achievements in 2020, share some of our top priorities for 2021 and, last but not least, express our thanks and wish you seasons' greetings.
 

Looking Back
The platform and framework for EFAA's activities are the 3-pillar strategy of informing, connecting, and advocating for our member organisations and their more than 370 000 individual members, providing services to millions of SMEs.

Our key achievements in 2020 include:

Looking Forward
As 2020 has proved, it is impossible to predict the future with any degree of accuracy. What we can expect is that 2021 will be at least as busy, challenging and productive as 2020.

Our priorities include:

  • Voicing the needs of SMP and their SME clients, by promoting the use of the “think small first” principle and by seeking to ensure a balanced and fair regulation of SMP and SME activities.

  • In line with the “think small first” principle, advocating for the specific needs of SMPs in order to ensure a diversified and sustainable professional accountancy service market; promoting UE harmonisation policies which are in the best interest of SMEs and SMPs

  • Continuing to promote the special role SMPs play in the future of Europe’s economy and society; both as key ‘enablers’ in helping to translate the EU’s SME strategy into reality and as advisor on key topics such as IP rights, Early Warning mechanisms, digital transformation and sustainability.

  • Enhancing and emphasizing the importance of the role played by SMPs in society, not least in view of their close relationship with their SME clients, especially with policy makers and relevant stakeholders

  • Creating opportunities for members to exchange best practices and knowledge relevant for SMPs and their SMEs clients.

  • Advocating for scalable NFI for SMEs, for restricting late payment, for single stand-alone audit standard for LCEs / SMEs and for the achievement of a complete single market on the basis of the "Think Small First" principle.

  • Developing further and promoting EFAA’s DCMM, to enable SMPs to become future-ready, to operate efficiently and to leverage technologies so as to offer even better services to SMEs

  • Forging closer links with Members of the European Parliament and the European Commission

  • Hosting EFAA International Conference on Thursday 24 June 2021

  • Continuing the collaboration with the partners of the ERASMUS+ project INTEREST, to develop education and training materials on IR for SMEs

  • Contributing to the Early Warning Europe Network


Thanking you and wishing you season’s greetings
We have many to thank. The members of the EFAA Board of Directors, our expert group and working group members, our member organisationsEFAA’s Special Advisors and our stakeholders. But, most of all, you, the reader. For supporting us in our endeavour to better serve, support and speak for SMPs across Europe.

We wish you all seasons’ greetings!

 

 

 

 

 

 

Member Feedback and Contributions 

Please share this newsletter with colleagues. Members are welcome to translate and reproduce extracts from this newsletter for their own communication purposes while acknowledging this newsletter as the source.

The next issue is slated for mid January 2021. We welcome feedback on how to improve this newsletter as well as contributions from our members, especially initiatives that other EFAA members might be keen to know about.

Please contact Sara Zambelli / Paul Thompson

 

 

 

 

 

 

2021

24 February (11.00-12.30 CET): ACCA-PwC WEBINAR - Diversity, Inclusion and Belonging [SAVE THE DATE - NEW]


24 June: EFAA 2021 International Conference


25 June: EFAA 2021 Annual General Meeting (Members Only)


 

Please note hyperlinked text to further information. 
If you have any events to add please email Sara Zambelli