How Might Accounting Standards Review Affect Your SME

Looking after your company’s finance can be a tough game in itself, struggling to keep things balanced. But things are often made a good deal more complicated when laws are introduced regarding the handling of accounts and their standards.

Here, we take a look at the impact that a change to accounting standards might have on your SME, as well as pointing out a few tips to help you deal with the changes.

What’s brought about the possibility of change?

It’s always difficult to know the true and underlying reasons for change in international monetary law but this recent piece in the Financial Times highlights the root of the issue. In a nutshell, a number of members of the European Parliament have raised concerns that the current standpoint on accounting standards in Europe points to an incompatibility between standards and company law.

The accusation is that the current situation ‘undermines’ the need for financial statements to be ‘true and fair’.

What do the changes mean for SMEs?

The precise changes are yet to be established, so it’s hard to say precisely what the impact will be. However, if the motivations for changes are to be believed, the changes will simply be aimed at encouraging businesses to be ‘true and fair’ when it comes to their finances.

For SMEs operating in the UK with nothing to hide, this shouldn’t create too much fuss. It’s important to recognise, however, that this is likely to call not only for complete honesty, but also for a high level of precision and accuracy.

Creating accurate accounts

It might be easier for larger firms to keep comprehensive and accurate accounts as they are able to dedicate entire teams to the job on a full time basis, but that’s not to say that it’s out of the reach of smaller companies.

Fortunately, the development of technology has done great things for small businesses. Simply using accounting software can eradicate the need for businesses to employ a dedicated team of accountants. Instead, the software allows various existing employees to access and make changes to key information from anywhere in the world.

Not only does accounting software make it easier for staff to access a company’s accounts when authorised, but they can help highlight mistakes and make them easier to put right. This will make it easier for companies to create open and honest financial reports.

Related posts: