Implementation of the Fourth Directive

Transcription

1 REPARIS A REGIONAL PROGRAM Implementation of the Fourth Directive Framework, tools, guidance, and action plan THE ROAD TO EUROPE: PROGRAM OF ACCOUNTING REFORM AND INSTITUTIONAL STRENGTHENING (REPARIS)

2 The Negociation Framwork for EU Accession! The negociation framework outlines the principles governing negociation! 35 chapters to be negociated (ex: Croatia)! Chapter 6: Company Law includes the provisions for financila reporting and comprizes relevant directives and regulations, including Fourth Company Law Directive Seventh Company Law Directive Insurance accounts Directive Banks accounts Directive IAS regulation 2

3 The Negociation Framwork for EU Accession! In all areas of the acquis, the candidate must bring up: its institutions, management capacity judicial systems Up to the EU standards! with a view of implementing the acquis effectively in good time before accession 3

4 The Negociation Framwork for EU Accession! The Commission undertakes a formal process of examination of the acquis, called screening to assess in order to explain it to the authorities, and assess the state of preparation of the candidate country! To facilitate the alignment with the acquis and discussions with the commission the use of concordance table is recommended although it is not specifically mentioned in the framework agreement 4

5 Importance of concordance tables! Definition: concordance tables are used to facilitate monitoring of the transposition of EU law into national laws by the Member States. They show precisely how provisions in EC directives are being transpose at national level. They are a good communication tool with the EC before negotiating the chapters! In addition to the monitoring of the transposition, concordance tables represent an important implementation tool linking the Directive requirements to country obligations (laws and regulations)! The concordance table enables to ensure an effective transposition of the directive but also is a good way of avoiding gold plating 5

6 Preliminary work to the concordance table! Identify all laws and regulations that are in the scope of the First, Fourth, Seventh Directives, Banks account directive, Insurance accounts directive Laws Regulations Accounting Standards Charter of accounts and rulebooks when it comes to accountings directives Note: it is considered that the IAS regulation, thus IFRS as adopted by the EU is compatible with the EU Fourth and Seventh Directive, but not IFRS for SMEs 6

7 Example of a concordance table Directive 2006/43/EC on statutory audits: Transposition Measures Article Objective Implementation 1 Describes the Directive s subject matter. No implementation required. 2 Sets out definitions of terms used in Directive. Directive definitions reflected in substantive implementing provisions. APPROVAL OF AUDITORS 3.1 Statutory audits may only be carried out by approved statutory auditors. 3.2 Competent authorities to be designated for approving statutory auditors. 3.3 Statutory auditors who are individuals to be approved only if articles 4 and 6-10 are met. Section 1212(1). Section 1217 and Schedule 10. See implementation of articles 4 and 6-10 below. 7

8 Concordance table - possible format Directive Article Description of the Directive Requirement Reference and description of the corresponding requirements in the country law and explanation of differences Concordance Status (Full, Partial, Absent) Art.1 Application of the Fourth Directive The Fourth Directive applies to companies with limited liability Section I General Provisions Art. 2 Annual Accounts and True and Fair View The annual accounts comprise the balance sheet, the profit and loss accounts and the notes to the financial statements Option Inclusion of other statements in the annual accounts e.g. cash-flow statement, statement of change in equity Reference to the true and fair view concept 8

9 Overall Scope of concordance tables for A&A obligations Enterprise Sector to comply with the Fourth Directive Banks and insurance companies need to comply with the respective requirements of the Bank Accounts Directive and the Insurance Accounts Directive IAS regulation for insurance regulations 9

10 What about IFRS for SMEs! IFRS for SMEs is not yet an option as such for EU member States! IFRS for SMEs is gaining momentum in many countries UK has proposed a modified version of IFRS for SMEs compliant with the Fourth Directive For small and medium-sized entities Not micro entities (local businesses, corner shops) 10

11 Future modifications of the acquis for A&A! EC will prepare a proposal for modifying the Fourth and Seventh Directive in 2011 Tentatively before end June Simplification process, less options Options impedes comparability Simplification of the obligations for small enterprises The proposal for micro did not go through Council! The EC will publish before end-june an update of the 1998 study on the implementation of the Fourth Company Law Directive 11

12 Key Messages! Full IFRS is not a credible option (see experience of Croatia)! The use IFRS for SMEs is not permitted yet but the UK has proposed a modified version to comply with the Fourth Directive for non-public interest entities! IFRS for SMEs is not a suitable options for micro-enterprises still unnecessarily complicated for small businesses! The Commission is likely to propose excluding micro from the application of the directive definition of micro will be key (qualitative vs. quantitative definition, or both) 12

13 Activity! To prepare an action plan indicating Resources needed to prepare the concordance table List of stakeholders who need to be involved and their possible contributions Other in-country resources Technical Support of the World Bank Cooperative communication tools: wiki, blogs, facebook group How does the community can help in discussing policy choices or technical options A timetable Providing the topics that will be dealt with (eg. layouts, publications, audits ) 13