Client News > Release
13-05-2010
Failure of Government to Act is Adding to Regulatory Burden on SME’s - CPA
A failure by Government Departments to act on the recommendations of high level review groups is adding to the regulatory and administrative burden on Ireland’s SMEs, the Institute of Certified Public Accountants said today.
Addressing the Joint Oireachtas Committee on Economic Regulatory Affairs, Mr. Niall Byrne, Vice President of the CPA, said that two years after the Company Law Review Group (CLRG) had prepared a General Scheme of the Companies Consolidation and Reform Bill, its proposals were still with the Parliamentary Draftsmen’s Office with no sign of it being brought to draft legislation.
"The CLRG proposed a sea change in company law legislation which tilts the balance firmly towards the interests of tens of thousands of small private companies. This is effectively a 'think small first approach' which would greatly benefit SME Directors in particular in allowing them to understand and comply with their company law requirements. From a better regulation point of view, in addition to the consolidation of existing legislation, the Bill will contain a number of reforms, which will make the incorporation and operations of companies easier", he said.
"Resources need to be applied to free up the drafting log jam and that the Office of the Parliamentary Counsel to the Government be tasked with drafting legislation which can swiftly progress to Bill stage".
"Similarly, the High Level Group on Business Regulation identified over €20 million worth of administrative cost savings for business in its first report through cutting out paperwork, revising the rules for small business and making better use of online services. We need to see Government wholeheartedly implementing the recommendations of this group in order to assist small and medium sized companies to flourish", he said.
He pointed out that a review by the Department of Enterprise, Trade and Innovation had endorsed the early adoption of electronic filing along with XBRL (extensible business reporting language) financial statements, which are becoming a standard means of communicating financial information.
"It offers cost savings, greater efficiencies and improved accuracy to all those involved in supplying or using financial data. Endorsing the approach is one thing; making it happen is another. In order to quickly reduce the administrative burden on business we call on the Department to establish a timetable for the introduction of XBRL and to form a high level cross agency working group to make it happen".
"Over 90% of businesses in Ireland are either micro, small or medium enterprises. These companies will be critical to our economic recovery and deserve to be supported. Excellent progress has been made in recent years in easing the burden on small business, but we cannot be complacent. It is important to recognise that even small changes can make a meaningful difference to the viability of a business".
"All of the issues raised in our submission to this committee can be addressed in the short term. The main goal in the immediate future must be to foster an atmosphere in which SMEs can flourish while at the same time ensuring proportionate regulation which will protect Ireland’s reputation as a safe environment in which to conduct business", said Mr. Byrne.
The Institute of Certified Public Accountants in Ireland has identified the following eight areas where we believe change will positively impact the administrative and regulatory burden on Irish SMEs:
1. Proportionate sanctions for non compliance.
2. Unavailability of audit exemption to small groups:
Currently in Ireland all companies in a group, regardless of their size or the size of the group must have an audit. This is at odds with the UK, for example, where the individual companies in a group can avail of the audit exemption where the group has turnover less than stg£5.6m and a combined balance sheet total of less than stg£2.5m. This sensible approach frees up the time of the business of the business owner, and allows accountants to concentrate on strategic advice for businesses within that group.
3. Change in VAT registration limits to positively impact small business:
Request for an increase in VAT registration threshold for all goods and services to €120,000.
4. Removal of administration burden from filing process:
Fast track of the introduction of extensible business reporting language (XBRL), which would allow the electronic filing of all financial data with government bodies such as CRO and Revenue.
5. Reform of bankruptcy legislation to encourage an entrepreneurial culture:
Request a review of current legislation in this area and to introduce similar legislation to the UKs Enterprise Act 2002.
6. Company law for the 21st century - Think small first approach:
Draft consolidated companies legislation has been in existence for some time which will reform and modernise Irish company law in many areas. We urgently need to progress this legislation as a clear benefit exists for business which outweighs any cost involved.
7. Protecting the public interest - legal recognition of the term 'accountant'.
8. Freeing up of working capital:
A request for an increase in the turnover limit for accounting for VAT on a cash receipts basis to be increased to €3 million.
