The Financial Reporting Council and the Department for Business, Innovation and Skills (BIS) have published a joint missive calling for annual accounts for the smallest businesses to be simplified in order to cut red-tape for micro-entities.
The FRC say that the paper, timed to coincide with an Office of Tax Simplification (OTS) consultation on SMEs, is the first step to freeing them from the shackles of accounting toil.
Objectors say that simpler reporting requirements could spook traders and creditors making them reluctant to engage, fearing SMEs will be unable to honour their debts.
Supporters say the new proposals will cut red tape, freeing businesses up to expand and develop – boosting the economy at the same time.
John Davies, ACCA head of technical, welcomed the principle, but feared the practice.
He said: “Preparing accounts is important from the perspective of financial discipline.”
However he said the institute would be open to evidence of excessive reporting requirement that could be cut under new proposals.
ICM chief Philip King said the economy could actually suffer if reporting restrictions were relaxed.
“Without audited numbers that can be trusted, banks will not lend and suppliers will not extend credit to their customers,” he said.
“Credit fuels business – access to credit comes from greater access to information, not less.”
The BIS/FRC proposition calls for a simplified trading statement (rather than the current profit and loss account), a statement of position – including details of assets and liabilities – and a simplified annual return.
If you want more information then please contact Rodliffe Accounting Ltd.