Latest From Brussels | April 2019 N° 7

Foreword from the President

JOIN US: EFAA International Conference 2019 Building a Digital Practice, 27 June, Amsterdam
Member Spotlight: Spain
EU Elections: SMEs are Fundamental for Sustainability
Future of Audit in the UK
Business Insolvency Directive and Role of Early Warning Mechanisms
Developments in International Standard-Setting: IESBA

Member Use, Feedback and Contributions
Upcoming Events
EFAA Digital - Recommended Reading

Dear Members and Friends of EFAA,

The Elections of the Members of the European Parliament (MEPs) representing more than 512 million people from 28 member states are edging closer. A reduction of the current number of 751 seats to 705 after the anticipated departure of the UK will not come into effect since the Article 50 process has been extended and the UK looks unlikely to leave the EU before the elections. The elections follow national rules and therefore differ from member state to member state. For example, not only do the election days differ but also the electoral thresholds, the minimum voting age and even the voting systems. A good infographic summary is provided here. But even more important is what individual candidates stand for and how much you can expect them to support SMEs and SMPs. As you may remember we at EFAA have published a brochure summarising 7 priorities for SMEs to support you in making the right choices. Read more below on the contribution of SMEs to a more sustainable economy and how SMEunited supports it. Also enjoy reading about professional developments in Spain and updates on the future of audit in the UK and elsewhere, the relevance of early warning systems and the IESBA’s projects.
Yours sincerely,
Bodo Richardt

JOIN US: EFAA International Conference 2019 Building a Digital Practice, 27 June Amsterdam

EFAA’s 2019 International Conference ‘Building the Digital Practice’ has the focus on the new professional services that digital technologies enable SMPs to offer and the steps SMPs need to take in order to provide such services. The event will take place in Amsterdam on 27 June 2019 at EFAA’s Dutch member, Nederlandse Beroepsorganisatie van Accountants – the Dutch professional association of accountants. The conference will include a keynote address from Femke Hogema a widely published entrepreneur who has helped countless SMPs transform from simply providing accounting and bookkeeping services to advising SMEs and being a ‘true profit advisor’. The future for small firms will depend on the services they provide and how technology is enabling them to shift into advisory services as Mark Koziel, Executive Vice President, Firm Services at the AICPA, explains in this IFAC video. For more information on the EFAA International Conference, including program, local hotel accommodation, and how to register please see here.

For more information: Please contact Sara Zambelli

Member Spotlight: Spain
Consejo General de Economistas (CGE) as the longstanding member from Spain has been actively supporting EFAA’s work with representatives in EFAA’s Board and expert groups. Dr. Salvador Marin Hernandez (pictured above right) currently represents EFAA on the International Accounting Education Standards Board’s (IAESB) Consultative Advisory Group. CGE holds its 1st International Meeting of Accounting Economists in Zaragoza on 16-17 May 2019. EFAA President Bodo Richardt is invited to present a key note on professional scepticism and ethics.
Through a law passed in December 2018 Spain has transposed Directive 2014/95/EU which lays down the rules on disclosure of non-financial and diversity information (NFI) by large companies. As the European Commission explains companies are required to include non-financial statements in their annual reports from 2018 onwards. The new Spanish law requires that assurance be provided on NFI. These assurance engagements - which can be performed by an auditor, economist or accountant – are typically based on International Standard on Assurance Engagements (ISAE) 3000 Revised, Assurance Engagements Other than Audits or Reviews of Historical Financial Information. CGE’s Esther Ortiz Martinez (pictured left) is convinced that “this presents a significant new opportunity for SMPs, an opportunity that stands to grow if SMEs choose to publish NFI or else are required to by large customers or suppliers. Although presently the assurance market is dominated by the Big Four, SMPs may be able to gain some market share.” Dr. Ortiz Martinez is keen to learn whether assurance on NFI is required in other EU member states and, if so, who is doing this assurance and whether there is local regulation of these services. Please send your comments to Paul Thompson.
For more information: Please contact Paul Thompson

EU Elections: SMEs are Fundamental for Sustainability
In the 5th week of its campaign for the EU elections SMEunited highlighted that SMEs are fundamental for the EU’s pursuit of sustainability. Similarly at the SME Intergroup’s breakfast hosted by EUROCHAMBRES ‘An SME friendly European Parliament: looking back, moving forward’ on 10 April 2019 in the European Parliament, MEP Molly Scott Cato stressed the role SMEs can play in achieving a sustainable and circular economy. In EFAA’s election Memorandum, we set out 7 priorities for SMEs including ‘Promote Contribution of SMEs to a More Sustainable Economy’. EFAA explains the role that SMPs can play for example, through advising SMEs on how to be sustainable and helping them disclose their environmental and social impacts.
For more information: Please contact Sara Zambelli

Future of Audit in the UK
A number of reviews on the audit and the audit market have been concluded or are in progress in the UK. The status quo does not appear to be an option. While these reviews stand to impact large audit firms the most there may be knock-on effects to SMPs and the risk of contagion as other European jurisdictions follow suit. Indeed, the Dutch Authority for the Financial Markets (AFM), following its study, has initiated a review of the Dutch audit market. The UK government’s ‘Independent Review into the Quality and Effectiveness of Audit’ culminated in the Brydon consultation paper published on 10 April 2019. This Financial Times article examines the potential break-up of the Big Four. While the article reveals that the chair of the UK House of Commons’ Business, Energy and Industrial Strategy (BEIS) Committee, whose report and recommendations for the reform of the UK audit market are summarised here, prefers full break-up, the Big Four oppose an ‘operational’ split plan.
For more information: Please contact Paul Thompson

Business Insolvency Directive and Role of Early Warning Mechanisms

On 28 March 2019 the European Parliament endorsed the text of the EU Business Insolvency Directive. An important element of the new Directive is the introduction of an obligation for member states to develop and ensure access to Early Warning tools for companies in financial difficulties. On 4 April 2019 Anabela Santos (second from the left), technical advisor of EFAA’s Portuguese member Ordem dos Contabilistas Certificados (OCC) represented EFAA as a panellist at Early Warning Europe’s Experts Network meeting. Accountancy Europe has issued a factsheet, The Business Insolvency Directive - What can the accountancy profession expect?, providing an overview of the Directive’s main provisions on the potential involvement of professional accountants as restructuring practitioners.
For more information: Please contact Paul Thompson

Developments in International Standard-Setting: IESBA

The International Ethics Standards Board for Accountants (IESBA) held a webinar to support the rollout of its International Code of Ethics for Professional Accountants (including International Independence Standards). The webinar details the revisions and restructuring changes made to the Code  and highlights various resources and tools available to help support implementation of the Code, including the soon to be launched e-Code. IESBA has just released its Strategy and Work Plan, 2019-2023, Elevating Ethics in a Dynamic and Uncertain World, which aims to safeguard the relevance of the Code in an era of changing technologies, business methods and public expectations. Gaylen R. Hansen has been appointed chair of the IESBA Consultative Advisory Group (CAG), effective 1 July 2019, following his election by IESBA CAG members including EFAA’s representative Hysen Cela (IEKA) for EFAA.
For more information: Please contact Paul Thompson 

Member Use, Feedback and Contributions 
Please share this newsletter with colleagues. Members are welcome to translate and reproduce extracts from this newsletter for their own communication purposes while acknowledging this newsletter as the source. The next issue is slated for mid-April 2019. We welcome feedback on how to improve this newsletter as well as contributions from our members as part of our Member Spotlights series. Please contact Sara Zambelli / Paul Thompson

Upcoming Events

6-7 May: European Business Summit - Brussels
16 May: Joint Conference European Commission and ECB on European Financial Integration - Brussels
16-17 May: IIRC’s Global Conference 2019 - London
16-17 May: Economistas I International Meeting of Accounting Economists – Zaragoza, Spain
16-17 May: IFAC / IAASB / IESBA Conference on Standards for SMEs – Paris
29-31 May: EAA 2019 - 42nd Annual Congress – Paphos, Cyprus
27 June: EFAA International Conference – Amsterdam
28 June: EFAA General Assembly – Amsterdam (EFAA members only)
9 September: IESBA CAG – New York
10-11 September: IAASB CAG – New York
10-12 October: APFM VI Eurasian Forum of Accountants and Auditors – Baku, Azerbaijan
25 October: CAFR Congress of the Romanian Audit Profession – Bucharest
30 October – 1 November: UNCTAD-ISAR 36th Session – Geneva
9-11 December: DCPA19 – Seattle, USA

Please note hyperlinked text to further information. If you have any events to add please email Sara Zambelli
EFAA Digital - Recommended Reading
EFAA Digital - Recommended Reading

Guidance on Artificial Intelligence
The European Commission published the document “Ethics Guidelines for trustworthy AI” and a communication “Building Trust in Human-Centric Artificial Intelligence”. This publication is part of the AI strategy of April 2018 which seeks to clarify the type of AI Europe wants. This IFAC Gateway article provides the key guidance for professional accountants on AI extracted from the report A CPA's Introduction to AI: From Algorithms to Deep Learning, What You Need to Know.

Guidance on Digitalization
This Forbes article explains what is meant by the terms ‘digital transformation’, ‘digitization’ and ‘digitalization’, each of which have distinct meanings. Individual professionals and accountancy practices are increasingly looking for tools to help them evaluate and improve their digital competence which Anders Skov, internet sociologist, provides a free online tool, Digital Competency Wheel, that enables individuals to map their digital competency while the European Digital Competence Framework for Citizens offers a tool to improve citizens’ digital competence. The EFAA International Conference 2019 will serve as the launch event for a new tool to help Europe’s SMPs enhance their digital competence.  

GDPR Update
SMEunited submitted its comments on the guidelines drafted by the European Data Protection Board (EDPB) on Codes of Conducts under the GDPR. While welcoming the possibility to comment on the Guidelines, SMEunited said it is crucial that every code of conduct allows the adherence of any controller or processor, so also of a self-employed or an SME.

Please follow the EFAA Twitter feed for regular and relevant news posted daily here.
Join EFAA’s Digital Community here by emailing Martin de Bie or Paul Thompson.
Latest From Brussels | 2019 | European Federation of Accountants and Auditors for SMEs
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