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European Federation of Accountants and Auditors for Small and Medium-sized Enterprises

EFAA for SMEs

The European Federation of Accountants and Auditors for small and medium-sized enterprises (EFAA for SMEs) is an umbrella organisation for national accountants and auditors' organisations whose individual members provide professional services primarily to SMEs within Europe.

Lobbying Activity

Meeting with Claudiu Ciprian Cristea (Head of Unit Internal Market, Industry, Entrepreneurship and SMEs)

16 Jan 2025 · Dialogue with stakeholders to inform the evolution of the EU eInvoicing policy, with a particular focus on the forthcoming eInvoicing strategy

Response to Rationalisation of reporting requirements

28 Nov 2023

Please find attached the reply of the European Federation of Accountants and Auditors for SMEs (EFAA for SMEs). EFAA for SMEs is the umbrella organisation for national accountants and auditors organisations whose individual members provide professional services primarily to SMEs. EFAA has 15 members throughout Europe representing almost 380,000 accountants and auditors.
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Response to European Sustainability Reporting Standards

4 Jul 2023

EFAA appreciates the opportunity to provide our comments on the European Commission (EC) Consultation on the European sustainability reporting standards (ESRS) first Set. While the four week consultation period has presented us significant challenges in compiling a robust response, a challenge exacerbated by the extent of the many changes the EC has made to the draft standards it received from EFRAG, we fully recognize the EC has good justification for this. We strongly support the timely and robust development and implementation of the ESRS. And we strongly support the ECs efforts to simplify this first set of ESRS and EFRAGs timely development of implementation guidance. We believe the EC has struck a reasonable balance between ambition and pragmatism. Notwithstanding our support, we continue to have concerns about the indirect impact of the ESRS on non-listed SMEs. This impact is primarily the consequence of applying impact materiality through value chain reporting. We believe this will impede the Commissions desire to reduce the reporting burden on companies, especially SMEs, by 25%. Accordingly, we question whether there is a need for more support for non-listed SMEs that are in the value chain of in scope companies. We elaborate on these concerns and the potential additional action and support to address them below. We recognize that non-listed SMEs are instrumental to the timely sustainable transition of the EU economy and but that they need help and time if they are to play their full part in this transition. Read our feedback in full in the attached document.
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Meeting with René Repasi (Member of the European Parliament, Rapporteur for opinion)

31 Mar 2023 · EU-Lieferkettengesetz/ Corporate Sustainability Due Diligence Directive - Staff Level

Response to Enhancing the convergence of insolvency laws

17 Mar 2023

Please see attachment.
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Response to Tackling the role of enablers involved in facilitating tax evasion and aggressive tax planning in the European Union

12 Oct 2022

The European Federation of Accountants and Auditors for SMEs, EFAA for SMEs, welcomes the efforts of the European Commission initiatives aiming to step up the fight against tax evasion and aggressive tax planning. While EFAA did not respond to the consultation questionnaire, attached is our position focusing on points of interest for small- and medium-sized accountancy practices: 1. Relation of SAFE to existing national regulation 2. Need for a clear definition of aggressive tax planning 3. Scope of the initiative: complex structures in Non-EU-Countries 4. Notification obligations of EU taxpayers
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Response to Commission Delegated Regulation on taxonomy-alignment of undertakings reporting non-financial information

27 Aug 2020

• EFAA is the umbrella organisation for national accountants and auditors’ organisations whose individual members provide professional services primarily to SMEs. Constituents are mainly Small- and Medium-sized Practitioners (“SMPs”), including a significant number of sole practitioners. EFAA has 13 members throughout Europe representing over 350,000 accountants and auditors. EFAA is a member of EFRAG and SMEunited. • We support development of an NFR standard for SMEs, preferably by EFRAG with robust participation of SME organisations. This NFR for SMEs standard should be voluntary and cover sustainability / environmental matters to serve as fulfilment of the Taxonomy Regulation. • While we recognize the need for sustainable finance, we have concerns about the impact on SMEs, especially during these challenging times. Accordingly, we urge the Commission to apply the following principles for SMEs: 1. Ensure the proportionality, simplification, and flexibility of reporting requirements. 2. Appoint SME organisations as advisory and rating agents. 3. Provide financial support and advice to help SMEs make the sustainability transition. 4. Create incentives for SMEs that voluntarily apply NFRD e.g., facilitate access to finance, tax breaks, public rankings, preferred treatment in public procurement tenders etc. 5. Avoid the blanket ‘brown-listing’ of certain activities. • We appreciate the Inception Impact Assessment recognizing the direct and indirect impacts on SMEs. We believe the indirect impacts caused by: (i) non-financial undertakings under the scope of the NFRD requesting taxonomy-specific information from their SME suppliers; and/or (ii) financial undertakings under the scope of the NFRD requesting taxonomy-specific information from SME clients and investees may be significant. Moreover, the NFRD´s scope should not be extended to include SMEs without simplification since we foresee the direct impact, in terms of the additional costs SMEs will incur in collecting, organising, and disclosing taxonomy-relevant information, to be considerable. • In the Summary Report of the Public Consultation on the Review of the Non-Financial Reporting Directive we note strong support for the NFRD to define environmental disclosures according to the six environmental objectives set out in the Taxonomy Regulation. While we support this view for those undertakings that presently fall under the scope of the NFRD we believe they will likely prove too burdensome for SMEs were the NFRD to be extended to include them without modification or a specific standard for SMEs. • We believe SMEs will struggle to report their taxonomy compliant activities and produce the metrics and thresholds required by the taxonomy. Simpler reporting is essential for SMEs. • We recognize that the Commission might, as a first step, introduce mandatory reporting obligations for SMEs from sectors with a high transition risk. If they do then this may require a gradual approach and a development of training schemes that could help to build a common understanding of the taxonomy and disclosure requirements. • EFAA stands ready to provide further input on the Commission’s plans and will continue to provide feedback as these plans develop.
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Response to Revision of Non-Financial Reporting Directive

24 Feb 2020

The EFAA Memorandum for Elections to the European Parliament 2019 - SMPs Supporting SMEs for Europe (see https://www.efaa.com/cms/upload/efaa_files/pdf/events/2019_brussels/20190219-EFAAEPPrioritiesforSMEs-FINAL_for_web.pdf) included priority “4) Promote Contribution of SMEs to a More Sustainable Economy” and specifically requested “the introduction of measured and proportionate requirements for SMEs to report on their contribution to a sustainable and circular economy.” We see this as a key part of the effective implementation of the “Green Deal” which seeks to encourage companies to focus on their long-term development and contribution to a sustainable economy. Companies and financial institutions will need to increase their climate-related disclosure (CRD) so that investors / owners and other stakeholders are well informed about the sustainability of their investments. Only then can we truly and effectively achieve sustainable finance. In the past few years EFAA has been focusing on the reporting of NFI by SMEs. In November 2018 we hosted an event in Austria as the launch event for the publication of the survey report on NFI by SMEs (see https://www.efaa.com/events/reporting-of-non-financial-information-by-smes.html) and in February 2019 we held this roundtable in Brussels https://www.efaa.com/events/non-financial-reporting-requirements-for-smes-in-europe.html. As a federation representing 12 professional accountancy organizations (PAOs) with some 350 000 members working as SMPs or in SMEs we feel uniquely equipped to comment on the revision of NFRD from an SME / SMP perspective. EFAA’s preliminary position, which is subject to change after closer dialogue with its members during the recently announced public consultation phase, is that: • SMEs collectively constitute a majority share of economic, social and environmental impact. Furthermore, many, if not most or all, are inextricably integrated into supply chains such that they presently have to provide CRD to larger companies so that they can fulfill their reporting obligations. • For the Green Deal to be effective and the SDGs achieved SMEs must be factored into policy and actions and this extends to reporting of non-financial information, specifically sustainability information. • The reporting of NFI, especially sustainability information and CRD, and any external verification thereof should not become an excessive burden for SMEs. • If SMEs are to be scoped into the NFRD then the reporting and any external verification requirements need to be proportionate. If they are not to be scoped into NFRD then we suggest the EC issues non-binding guidance such that SMEs can decide whether to report and, if so, choose the appropriate way for their specific situation and the needs of their stakeholders (and similarly decide whether, and if so how, to have external verification of this NFI). • NFI can help organizations make better long-term strategic decisions that help them create lasting value for them and their stakeholders. • Various standards and frameworks exist for the reporting of NFI including Integrated Reporting. There is a case for the revised NFRD to recommend suitable standard(s) so as to help enhance the consistency, comparability and robustness of NFI reporting. • SMEs need support, accompanying measures, and tailor-made tools to help them operate in a sustainable way. • SMPs offer advice, accounting and assurance services to SMEs and as such are well placed to help them comply with NFRD and operate more sustainably.
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Response to Action Plan on anti-money laundering

19 Feb 2020

In this article https://www.ifac.org/knowledge-gateway/building-trust-ethics/discussion/fighting-corruption-requires-accountants-act-here?utm_medium=email&utm_source=transactional&utm_campaign=GKG_Latest Kevin Dancey, IFAC CEO, notes that corruption is costing the global economy US$3.6 trillion per annum, that accountants need to act and concludes: “We’ll never get rid of corruption. Criminals will always find a way to undermine public and private institutions, with terrible consequences for economies and individuals. But with clear set of a principles, a plan for action, and the will to act, we can fight back and stand up for the public interest. Professional accountants have a big role to play and a great opportunity to lead. Seizing that opportunity is essential to fulfilling the profession’s commitment to ethics and the public interest.” EFAA unreservedly agrees with Dancey: accountants have a key role to play and must act to fulfill their commitment to ethics and the public interes. Accordingly EFAA is taking a lead. Our 12 member organizations collectively represent 350 000 accountants across Europe. Most of these accountants work in or as small and medium-sized accountancy and tax practices (SMPs) – whose clients in aggregate number millions of small and medium-sized entities (SMEs) – or as accountants employed by SMEs. These accountants play a key role in advising SMEs on anti-money laundering, bribery and corruption. The evidence supports this. As this IFAC article https://www.ifac.org/knowledge-gateway/contributing-global-economy/discussion/helping-smes-handle-risks-bribery-and reveals the ACCA’s (ACCA is an EFAA member) 2019 survey on bribery and corruption found that 76% of SME respondents would welcome advice from their accountants on the policies and practices needed to deal with possible cases of bribery and corruption. EFAA continues to share guidance with our members on what accountants can do to help SMEs, for example: • https://www.accountancyage.com/2020/01/10/what-does-5mld-mean-for-accountants/ that outlines what steps accountants need to take now that the fifth AML EU directive has taken effect; and • https://www.accountancyage.com/2020/01/27/accountants-need-to-embrace-digital-aml-solutions/ that argues that accountants need to embrace digital AML solutions such as electronic verification (EV) technology. Finally, we stress that better, smarter regulation is needed and this demands regulators apply the “think small first” principle. Hence, EFAA looks forward to sharing our experience and views in the stakeholder meetings to be conducted by the commission services.
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