Chartered Accountants Ireland has welcomed the positive vote of the European parliament on the proposal to allow member states exempt very small companies (micro entities) from the requirements of the European Accounting Directives, which in Irish law, are reflected primarily in the Companies (Amendment) Act, 1986.

Micro companies are defined as companies meeting two of these three criteria – net turnover of less than one million euro, an average of ten employees in a financial year and a balance sheet total of under half a million euro.

The essence of the proposal is that subject to certain minimum requirements member states will be able to set their own needs and requirements for such entities.

The decision is subject to final approval by the EU Council

Commenting, Chartered Accountants Ireland Technical Director, Aidan Lambe said:

“Chartered Accountants Ireland welcomes this decision as a significant contribution to the debate on the financial reporting requirements and needs of so called micro entities.  If ultimately adopted by the EU this will allow the Irish governments to exempt relevant Irish SMEs from existing requirements, thereby reducing the regulatory burden on these companies.

What will be required is a national debate in Ireland involving all the relevant representative organisations, regulatory bodies and the public at large to determine whether and how we apply the new exemption.  Chartered Accountants Ireland looks forward to contributing to this debate.