EFRAG compatibility analysis: IFRS for SMEs and the EU Accounting Directives – sometimes unclear and ambiguous
08 June 2010
In some cases, EFRAG has assessed that the EU Accounting Directives were not clear and therefore could be interpreted in different ways. EFRAG has performed its assessment from a technical accounting perspective only.
EFRAG has submitted to the European Commission its analysis of the IFRS for SMEs' compatibility with the EU Accounting Directives.
EFRAG’s advice consists of:
· A letter to the European Commission specifying the requirements of the IFRS for SMEs that has been assessed to be incompatible with the EU Accounting Directives (the Letter). This letter also includes a description of the scope and limitations of the assessment.
· A feedback statement explaining EFRAG’s reasons for not considering requirements identified by EFRAG’s constituents to be incompatible with the EU Accounting Directives (the Feedback Statement).
· A working paper including EFRAG’s assessment of all the requirements of the IFRS for SME (the Working Paper).
It should be emphasized that the conclusions of the analysis are to be understood in the context of the limitations described in the Letter and that the Working Paper is an integral part of the analysis.
Advice on compatibility of the IFRS for SMEs and the EU Accounting Directives 2
(c) EFRAG has compared the detailed requirements of the IFRS for SMEs with those of the EU Accounting Directives (that is the Fourth and Seventh EU Company Law Directives) only. As a result, any possible incompatibility between the IFRS for SMEs and other EU Directives are not listed below.
(d) When assessing whether the requirements of the IFRS for SMEs were incompatible with the EU Accounting Directives, EFRAG has not taken into account whether the incompatibilities would arise in practice.
(e) In some cases, EFRAG has assessed that the EU Accounting Directives were not clear and therefore could be interpreted in different ways. If one of these interpretations would result in the IFRS for SMEs not being incompatible with the EU Accounting Directives, the requirement has not been included in EFRAG‟s list of incompatible requirements. The appropriate justification is provided in the document labelled “Compatibility issues – EFRAG working paper”. EFRAG wishes to emphasise that this working paper as well as its feedback statement are integral to the analysis.
(f) EFRAG has performed its assessment from a technical accounting perspective only. For this reason and because of the limitations identified above, EFRAG‟s assessment is not an assessment of the outcome of a potential EU court case.
(g) In its analysis EFRAG has not considered how the EU Accounting Directives have been implemented in the EU Member States.
(h) As the basis for its analysis, EFRAG has used the English versions of the EU Accounting Directives.
© EFRAG - European Financial Reporting Advisory Group
