In the media

10 April 2019

Evolution of SME audit in Europe from the perspective of the legislation and auditing standards by Hilde Blomme

This article was originally published in Tax, Audit & Accountancy March 2019 by ICCI

Legislation on the audit of SMEs in Europe

Up to the introduction of the 2013 Accounting Directive, there had always been a European Union (EU) requirement to have a statutory audit of ‘small undertakings’. However, Member States had been allowed to exempt all or part of their small companies, as defined locally, from a statutory audit, but within the confines of the EU legislation (see below). At the time of the development of the 2013 Accounting Directive, this was known as the ‘opt-out’ Member State option. Nowadays, following the transposition of the 2013 Accounting Directive, companies defined as ‘small undertakings’ are no longer required to have a statutory audit based on the EU legislation. Nevertheless, Member States can impose an audit on all or part of their small undertakings, also referred to as the ‘opt-in’ regime.

This decision to opt-in is usually driven by the conditions of these small companies and the needs of the users of their accounts. Indeed, the size of a country’s economy as well as the size of its individual entities might be taken into consideration. The need for certainty to banks, suppliers, shareholders and especially tax authorities might equally play a role in this decision. For instance, the rumour goes that in Finland, audit exemption thresholds for small entities are so low (see below) because the average frequency of a corporate tax inspection in Finland is every 100 years. Over the last ten years, Finnish audit exemption thresholds were actually doubled, but as overall corporate tax revenues started to decline, it was decided to go back to the lower thresholds. This was due to the consideration that there is a need for an independent eye also on very small companies at least once a year, in this case a statutory audit by an independent, external auditor.

[…]

Read the entire article here.

Related content

PublicationAudit exemption thresholds in Europe

21 February 2019

EventSimplifying auditing standards for small or non-complex entities

30 May 2018

PublicationSimplifying auditing standards for small or non-complex entities

12 April 2018

EventTax Day 2020

19 February 2020

EventDigital Day 2019: What does innovation cost?

19 November 2019

EventSME agenda for ECON: new term, what priorities?

5 November 2019

EventEvolving needs of SMEs: the profession’s role?

24 October 2019

BlogIs sustainable finance gender neutral?

16 October 2019

UpdateTax Policy

10 October 2019

UpdateAudit Policy

7 October 2019

PublicationEU Directive on Whistleblower protection

7 October 2019

PublicationKey audit matters in European Banking sector – update 2019

7 October 2019

Stories from practiceTo rebuild trust in auditors, we need the courage to speak up

7 October 2019

NewsSME Update

4 October 2019

Consultation responseIASB’s exposure draft on proposed amendments to IFRS 17 and EFRAG’s draft comment letter thereon

4 October 2019

PublicationHow to secure financing for SMEs?

30 September 2019

UpdateTax Policy

27 September 2019

UpdateTechnology

23 September 2019

Consultation responseIAASB consultation on Audits of Less Complex Entities

17 September 2019

UpdateTax Policy

16 September 2019

PublicationTax Dispute Resolution

13 September 2019

Stories from practiceAn external CFO supports SME growth

9 September 2019

UpdateSME

6 September 2019

Sign up for our newsletter