Proposal for a Directive of the European Parliament and of the Council amending Council Directives 78/660/EEC, 83/349/EEC and 91/674/EEC on the annual and consolidated accounts of certain types of companies and insurance undertakings
Date: 2002-05-28
Institutions: European Commission
Subjects: balance sheet, consolidated account, insurance company, publication of accounts, share capital, trading account

COMMISSION OF THE EUROPEAN COMMUNITIES

CORRIGENDUM : ce document
annule et remplace le COM(2002)259 final
du 28/05/2002 (concerne toutes les langues)

Brussels, 9.7.2002
COM(2002)259/2 final

2002/0112 (COD)

Proposal for a

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

amending Council Directives 78/660/EEC, 83/349/EEC and 91/674/EEC on the annual
and consolidated accounts of certain types of companies and insurance undertakings

(presented by the Commission)

EXPLANATORY MEMORANDUM

1.

INTRODUCTION

The 23-24 March 2000 Lisbon Council Conclusions stressed the need to accelerate
completion of the internal market for financial services, set a deadline of 2005 to implement
the Commission’s Financial Services Action Plan and urged that steps be taken to enhance the
comparability of financial statements prepared by EU companies whose securities are listed
on a regulated market.

On 13 June 2000, the Commission adopted its Communication The EU’s Financial Reporting
Strategy: The Way Forward1. The Communication proposes that all EU listed companies
should be required to prepare their consolidated accounts in accordance with a single set of
accounting standards, namely International Accounting Standards (IAS), from 2005 at the
latest. Adoption of uniform, high quality financial reporting rules in EU capital markets will
enhance overall market efficiency, thereby reducing the cost of capital for companies.

On 17 July 2000,
the ECOFIN Council welcomed the June 2000 Communication and
emphasised in its conclusions that the comparability of the financial statements of EU listed
undertakings, financial institutions and insurance undertakings is an essential aspect of the
integration of the financial markets. ECOFIN also invited the Commission to present a
proposal to introduce the new requirement and to establish an appropriate mechanism for
recognising IAS.

On 13 February 2001, the Commission adopted a proposal for a Regulation of the European
Parliament and of the Council on the application of international accounting standards2 (‘the
IAS Regulation’). The proposal sets out the mechanism for recognising IAS in the EU – that
they are considered vis-à-vis specified criteria and if considered suitable on the basis of those
criteria they be ‘adopted’ by the EU.

Most significantly, the proposal for a Regulation introduces the requirement that, from 2005
onwards, all EU listed companies prepare their consolidated financial statements in
accordance with these adopted IAS. It also provides an option for Member States to permit or
require the application of adopted IAS in the preparation of annual accounts and to permit or
require the application of adopted IAS by unlisted companies.

A recent survey3 of 700 EU listed companies reveals that 79% of Chief Financial Officers
support the European Commission’s recommendation that IAS should be mandatory for EU
listed companies by 2005. Strategic business and financial considerations, ahead of
accounting issues, are the most compelling reasons for considering the change to IAS. These
include marketability, cross-border mergers and acquisitions, shareholder dialogue and
finance raising.

Current EU accounting requirements are based primarily upon the following EU legislation
(hereafter collectively referred to as the ‘Accounting Directives’):

1

2

3

COM (2000)359, 13.06.2000
COM (2001)80, 13.02.2001
PricewaterhouseCoopers – International Accounting Standards in Europe – 2005 or now?

2

• The Fourth Council Directive 78/660/EEC of 25 July 1978 on the annual accounts of
certain types of companies sets out the requirements in respect of the preparation of the
annual accounts of companies4.

• The Seventh Council Directive 83/349/EEC of 13 June 1983 on consolidated accounts sets

out the requirements in respect of the preparation of consolidated accounts5.

• Council Directive 86/635/EEC of 8 December 1986 on the annual accounts and
consolidated accounts of banks and other financial institutions deals with those matters
specific to such institutions6; and

• Directive 91/674/EEC of 19 December 1991 on the annual accounts and consolidated
to the

accounts of insurance undertakings sets out the specific requirements relevant
preparation of accounts of such entities7.

The Accounting Directives will play an important role in the mechanism for adopting IAS
under the proposed IAS Regulation. In addition, they will continue to be the basis of
accounting legislation for entities which do not prepare their annual or consolidated accounts
in accordance with adopted IAS further to the IAS Regulation. Finally, they deal with
important matters which are outside the scope of the IAS Regulation (for example the
requirement to obtain an audit and to prepare an annual report) and will continue to govern
these areas.

The Accounting Directives have remained largely unchanged since their adoption as much as
23 years ago. In this time, accounting theory and accepted practice have developed
significantly and continue to do so. Numerous studies have been prepared or received by the
Commission which indicate that,
the Accounting Directives remain
in many respects,
consistent with current accounting theory and practice. However, in certain limited areas, their
requirements are incompatible with IAS which the EU will seek to adopt further to the IAS
Regulation. This situation is unacceptable for two reasons:

Firstly, if the Accounting Directives are to play an important role in the mechanism for
adopting IAS under the proposed IAS Regulation, they must reflect current accounting
developments. In this respect, the Directives should be structured so as to accommodate and
to be consistent with future incremental developments within IAS – it should not be necessary
to consider amendment of the Directives each time a new IAS is proposed.

Secondly, there must be a level playing field between companies which apply IAS and those
which do not. Such a position is necessary to enable also a smooth transition when companies
seek a public listing.

The objectives of this proposal are therefore threefold:

(1)

To remove all existing conflicts between the Accounting Directives and IAS;

4

5

6

7

OJ No L222, 14. 8. 1978, p. 11, Directive as last amended by Directive 2001/65/EEC (OJ No L283, 27.
10. 2001, p. 28)
OJ No L193, 18. 7. 1983, p. 1, Directive as last amended by Directive 2001/65/EEC (OJ No L283, 27.
10. 2001, p. 28)
OJ No L372, 31. 12. 1986, p. 1, Directive as last amended by Directive 2001/65/EEC (OJ No L283, 27.
10. 2001, p. 28)
OJ No L374, 31. 12. 1991, p. 7

3

(2)

(3)

To ensure that optional accounting treatments currently available under IAS are
available to EU companies which continue to have the Accounting Directives as the
basis of their accounting legislation (ie those companies which do not prepare their
annual or consolidated accounts in accordance with adopted IAS further to the IAS
Regulation); and

To update the fundamental structure of the Accounting Directives so that they provide
a framework for financial reporting that is both consistent with modern practice and
flexible enough to allow for future developments in IAS.

The proposed changes will remove all
83/349/EEC and 91/674/EEC and IAS in existence at 1 May 2002.

inconsistencies between Directives 78/660/EEC,

The Commission will present in due course consistent proposals in respect of Directive
86/635/EEC of 8 December 1986 concerning the annual accounts and consolidated accounts
of banks and other financial institutions.

2.

TIMING AND DATE OF APPLICATION

It is noted above that Lisbon Council set a deadline of 2005 for the implementation of the
Commission’s Financial Services Action Plan. The IAS Regulation and the modernisation of
the Accounting Directives are each essential components of the Plan. In order to successfully
is
this deadline, both components must be in place before 2005. Accordingly,
meet
extremely important to implement the proposed legislation as soon as possible.

it

3.

OUTLINE OF THE CONTENTS OF THIS PROPOSAL

3.1.

Article 1

Further to the objectives set out above, Article 1 makes those changes necessary to the Fourth
Council Directive 78/660/EEC of 25 July 1978 on the annual accounts of certain types of
companies.

Paragraph 1 – It is common practice for certain additional statements to be provided in annual
accounts, for example a cash flow statement. This revision expressly empowers Member
States to permit or require such statements be included in annual accounts. See also similar
amendment in respect of consolidated accounts in Article 2, paragraph 7.

Paragraph 2 – The accounting principle of ‘substance over form’ – where the economic effect
of a transaction or arrangement is considered in addition to its legal form – is already
embodied in the Accounting Directives (for example, in determining the identity of subsidiary
undertakings). This is consistent with the requirement that the annual (and consolidated)
accounts shall give a ‘true and fair view’ (Article 2(3)).

In addition to the recognition of these items is the manner of their disclosure within the
prescriptive formats for the profit and loss account and balance sheet specified in the
Directive. Under IAS certain transactions and arrangements must be disclosed in the profit
and loss account and balance sheet within items which reflect the substance of the transaction
or arrangement rather than its legal form. This revision expressly empowers Member States to
permit or require that, in determining within which format
item an amount should be
included, regard may be had to substance as well as form.

4

Paragraphs 3 and 6 – The balance sheet formats set out in Articles 9 and 10 of the 4th
Directive would not, in all circumstances, permit a balance sheet to be reported in accordance
with the requirements of IAS. It is considered that the balance sheet disclosure requirements
of IAS will provide comparable information and that, accordingly,
is appropriate to
empower Member States to allow disclosure in this manner, as an alternative to the formats
prescribed in Articles 9 and 10.

it

Paragraphs 4, 5, 7, 9 and 11 – IAS 37 Provisions, contingent liabilities and contingent assets
sets out specific requirements as to which amounts should be recorded as provisions for
liabilities. In the 4th Directive, Article 31 sets out certain basic rules as to the liabilities which
must be taken into account in preparing the annual accounts and Article 20 expands on these
principles, giving specific rules for provisions.

The provisions recorded under IAS are more specific than those under the 4th Directive. In
particular, IAS restricts the amounts recorded to those obligations which exist at the balance
sheet date. In addition to such amounts, the 4th Directive envisages also the provision of
liabilities which are ‘foreseeable’. The proposal resolves this inconsistency in the case of
companies applying IAS without necessarily changing the status quo for annual accounts and
unlisted companies. This has been achieved by amending Article 31 to require the recognition
of amounts consistent with IAS whilst allowing Member States to continue to permit or
require those additional amounts currently envisaged by the Directive. In addition, certain
minor changes to terminology and references have been proposed to facilitate the application
of IAS 37.

Paragraph 8 – This revision relates to the presentation of the profit and loss account of the
company, a statement which records income and expenditure of the company and whose
purpose is to reflect its financial performance. Other gains and losses, for example those
which arise on certain assets and which are considered to be unrealised, are currently reported
directly in the reserves of the company, if they are recorded at all.

The profit and loss account formats set out in Articles 22 to 26 of the 4th Directive are
compatible with the current requirements of IAS. However, the presentation of performance is
current being reconsidered by accounting standard setters worldwide,
including the
International Accounting Standards Board. It is considered highly probable that at some point
in the future the income and expenditure currently shown in the profit and loss account will be
presented together with other gains and losses in a comprehensive statement of total
performance for the period. Accordingly,
the proposals provide in the Directive some
flexibility such that its requirements will be compatible with these anticipated developments.

Paragraph 10 – IAS 38 Intangible assets permits the revaluation,
in certain prescribed
circumstances, of intangible fixed assets. The 4th Directive explicitly permits the revaluation
of tangible fixed assets; it does not refer to the revaluation of intangible assets. The proposed
revision amends Article 33(1)(c) so as to allow Member States to permit the revaluation of
any fixed asset, including intangibles.

Paragraph 12 and 22 – In May 2001 a Directive (2001/65/EEC8) was adopted amending the
4th Directive so as to permit financial instruments to be recorded at their fair value and for the
gains and losses which arise to be recorded in the profit and loss account. This was necessary

8

OJ No L283, 27. 10. 2001, p. 28

5

in order to permit
measurement.

the application of IAS 39 Financial

instruments: Recognition and

Other IASs require or permit the recognition of certain classes of asset at their fair value;
notably IAS 40 Investment property and IAS 41 Agriculture. These standards contain detailed
requirements concerning fair value and,
in both cases, gains and losses resulting from
recognition at fair value are required to be reported in the profit and loss account. The
proposed revision, adding new Articles 42e and 42f, is necessary in order to permit the
is expected that a Member State permitting, and any
application of these standards. It
company adopting, a policy of fair value should do so only in accordance with a recognised,
generally accepted accounting system, such as that provided by adopted IAS.

The revision contains a general provision empowering Member States to permit such a
treatment for any specified class or classes of asset. This is essential if the revision is to deal
adequately with future developments.

To avoid confusion, the terminology in Article 60 of the Directive has been amended from
‘market value’ to ‘fair value’.

Paragraphs 13, 21 and 23 – Reflect consequential changes to references.

Paragraph 14 – The 4th Directive currently includes a requirement for the preparation of an
annual report giving ‘at least a fair review of the development of the company’s business and
of its position’. The interpretation of this requirement has led to a wide variation of
disclosures, ranging from those which help to provide an understanding of the annual
accounts to mere ‘boiler plate’ statements. Whilst no change is proposed to the underlying
requirement for a ‘fair review’, it is desirable to promote greater consistency in the quality of
these reviews and to give additional guidance on the information content expected of a ‘fair
review’.

In proposing these amendments, consideration has been given to current best practice, in
the recent paper “Management’s analysis of the business” produced by the
particular,
European Accounting Study Group and to those disclosures anticipated under IAS. The
inclusion of detailed provisions has been avoided in order that the requirements do not lead to
boiler plate disclosures. This approach will allow additionally for future development in best
practice.

Consistent with the Commission Recommendation of 30 May 2001 on the recognition,
measurement and disclosure of environmental issues in the annual accounts and annual
reports of companies (2001/453/EC)9, the provisions require that the information included
shall not be restricted to the financial aspects of the company’s business. It is expected that
this will
to an
understanding of the company’s development and position.

lead to an analysis of environmental, social and other aspects relevant

Paragraph 15 – Further to the proposed changes to Article 51 of the 4th Directive, see
paragraphs 17 and 18 below, the last sentence of Article 48 concerning the disclosure of
certain elements of the report of the statutory auditor(s) has been deleted.

Paragraph 16 – This amends the provision of the 4th Directive which deals with the
publication of, and references to, the audit report in those instances when extracts from the

9

OJ No L156, 13. 6. 2001, p. 33

6

annual accounts are published. The requirements are amended slightly to reflect current
practice, requiring additionally the disclosure of any matters to which the auditor has drawn
attention without qualifying the audit report.

Paragraphs 17 and 18 – Standards on auditing, including the preparation and presentation of
an ‘audit report’ exist
in each Member State. Unfortunately, the interpretation of these
standards has not led to the expected degree of harmonisation – resulting in audit reports that
differ across Member States. These differences, some of which are significant, reduce
comparability and detract from the user’s understanding of this vital element of financial
reporting. The changes proposed in respect of the audit report reflect current best practice
concerning the format and content of an audit
report and will encourage greater
harmonisation.

Paragraph 19 – This change updates the Directive further to the introduction of the Euro.

Paragraph 20 – The 4th Directive provides a limited number of exemptions, generally in
respect of the obligation to make certain disclosures in the annual accounts, on the basis of the
economic importance of the company. It is considered, consistent with the Commission’s
proposals in respect of the use of IAS by EU listed companies, that such exemptions should
not be available to listed companies, regardless of their economic size. This is a reflection of
the overriding economic importance that attaches to the public trading of a company’s shares.
Accordingly, this revision removes the availability of the exemptions in the case of such
companies.

3.2.

Article 2

Further to the objectives set out above, Article 2 makes those changes necessary to the
Seventh Council Directive 83/349/EEC of 13 June 1983 on consolidated accounts.

Paragraph 1 – Article 1 of the 7th Directive describes those undertakings which are considered
to be ‘subsidiary undertakings’ of a parent undertaking. The current provisions acknowledge
influence (effective
that an undertaking may be controlled by the exercise of dominant
control), even in the absence of rights over a majority of the voting rights of the undertaking
(ie a legal power of control). However, the current provisions do require a participating
interest (as defined in Article 17 of the 4th Directive – broadly a minimum interest in the
capital) to exist. Under IAS, an undertaking is a subsidiary undertaking if it is controlled by a
parent, irrespective of the existence of an interest in the capital of the undertaking.

The issue has become more important in recent years with the development of legal structures
(often referred to as Special Purpose Entities) designed to give the effect of a subsidiary
undertaking without giving rise to a subsidiary undertaking under the existing requirements of
Article 1. Accordingly, it is considered that the current requirement in the Directive for a
participating interest to exist is no longer appropriate and it is therefore proposed to delete it.
This brings the Directive into line with IAS requirements.

Paragraphs 2, 4(b), 5, 6, 9 and 10 – The 7th Directive currently requires the exclusion of an
undertaking from the consolidated accounts of the parent if its activities are incompatible with
those of the parent such that inclusion would fail to meet the requirement to give a true and
fair view of the undertakings included therein taken as a whole.

It is now generally accepted that this is never the case. Regardless of the differing activities
the appropriate accounting treatment is the inclusion of the undertaking together with suitable

7

additional disclosure of
this
requirement is now considered redundant and has been deleted. This brings the Directive into
line with IAS requirements.

its impact on the consolidated accounts. Accordingly,

Consequential changes have been made to remove references to the deleted requirement.

Paragraphs 3(a), 4(c) and 13 – The 7th Directive provides a limited number of exemptions
from its requirements, on the basis of the economic importance of the company. It is now
considered, consistent with the Commission’s proposals in respect of the use of IAS by EU
listed companies, that such exemptions should not be available to listed companies, regardless
of their economic size. This is a reflection of the overriding economic importance that
attaches to the public trading of a company’s shares. Accordingly, these revisions remove the
availability of the exemptions in the case of such companies.

Paragraphs 3(b) and 4(a) – These delete defunct time-based provisions.

Paragraph 7 – It is common practice for certain additional statements to be provided in
consolidated accounts, for example a cash flow statement. This revision expressly empowers
Member States to permit or require such statements be included in consolidated accounts. See
also similar amendment in respect of annual accounts in Article 1, paragraph 1.

Paragraph 8 – This makes a consequential change resulting from amendments to the 4th
Directive above.

Paragraph 11 – These changes expand the guidance on the content of the consolidated annual
report and are consistent with those in Article 1, paragraph 14 above. Where both an annual
report and a consolidated annual report are required, it may be appropriate to present the
analysis as a single document, the primary focus being upon those matters which are
significant to the undertakings included in the consolidation taken as a whole.

Paragraph 12 – These changes relate to the requirements in respect of the audit report
concerning the consolidated accounts. The changes are consistent with those set out in Article
1, paragraphs 17 and 18 above.

3.3.

Article 3

Further to the objectives set out above, Article 3 makes those changes necessary to make the
Directive 91/674/EEC of 19 December 1991 on the annual accounts and consolidated
accounts of insurance undertakings compatible with IAS.

Most of the changes proposed are consequential to those to the 4th Directive described above.

Additional changes are proposed in order to reflect amendments made in May 2001 by
Directive 2001/65/EEC to the 4th, 7th Directives and to Directive 86/637/EEC. These changes
relate to the use of fair value in the case of certain specific items further to IAS 39 Financial
Instruments: Recognition and measurement.

No amendments are currently proposed to the prescribed formats for the balance sheet and
profit and loss account of insurance undertakings. Any such changes will be considered and
where necessary enacted, only when an International Financial Reporting Standard
specifically concerning insurance accounting is published.

8

Paragraph 1 – The first sentence of Article 1(1) of the Directive 91/674/EEC has been
updated to refer to new and amended Articles in the 4th Directive as follows:

• A new reference to Article 51a has been added, consistent with the insertion of this Article

into the 4th Directive (see Article 1, paragraph 18);

• A new reference to Articles 42a-42f of the 4th Directive concerning fair value has been

added;

• The reference to Article 43 of the 4th Directive has been amended to include also point 14

concerning certain fair value disclosures;

• A new reference to Article 61a of the 4th Directive concerning the revision of the fair value
provisions after three years of use (or five years after the adoption of the Directive) has
been added.

• Concerning the reference to Article 46, a specification to paragraphs 1 and 2 is added.

• A new reference to Article 50a is added for the sake of completeness.

• The reference to Article 54 has been removed, as this Article no longer exists.

In addition, a new second sentence has been added in relation to financial assets and
liabilities. It contains a “double override” provision which specifies that Articles 46 to 48, 51
and 53 of Directive 91/674/EEC shall not apply in respect to assets and liabilities that are
valued in accordance with Section 7a of the 4th Directive. The paragraph establishes the
hierarchy of rules in Directive 91/674/EEC and the 4th Directive concerning financial
instruments and is consistent with the amendment to Directive 86/635/EEC introduced in May
2001 by Directive 2001/65/EEC.

In addition, Article 1(2) has been revised to reflect consequential changes to references.

Paragraph 2 – This paragraph makes a consequential change in terminology.

Paragraph 3 – In order to facilitate full application of IAS 39, an amendment is included in
Article 46(5) to enable Member States to allow companies to use different valuation methods
for different elements of an investment item denoted by an arabic numeral or shown as assets
under C(1) on the balance sheet. An amendment to Article 46(6) requires that, where such
different methods are applied, the notes to the accounts include a description of the methods
used and the amount so determined.

3.4.

Articles 4 to 6 – Final provisions

The provisions in these Articles deal with the adoption and administration of the proposed
Directive.

4.

OTHER MATTERS

As noted in section 1 above, the proposed amendments will remove all inconsistencies
between Directives 78/660/EEC, 83/349/EEC and 91/674/EEC and IAS in existence at 1 May
2002.

9

This conclusion is supported by a review of the proposals performed by the European
Financial Reporting Advisory Group (EFRAG).

In the development of the proposals, a number of accounting topics were considered carefully
before concluding that no inconsistency or conflict exists. Where this was the case, no
proposal for amendment is necessary and none has been made.

Solely for the avoidance of doubt, it is noted that the following three topics have been
considered and it has been determined that no conflict arises with respect to:

• The recognition of actuarial gains and losses in accordance with the so-called ‘corridor

approach’ described in IAS 19 Employee Benefits.

• The correction of errors as either a prior period adjustment or as a current period item in
accordance with IAS 8 Net profit or loss for the period, Fundamental errors and Changes
in Accounting Policies.

• The application of reverse acquisition accounting in accordance with IAS 22 Business
combinations – ie where, in a business combination, the owners of a company being
acquired receive as consideration sufficient voting shares of the acquiring company so as
to obtain control over the new combined entity. In applying reverse acquisition accounting,
the company issuing the shares is deemed to have been acquired by the other enterprise;
this means that, from an accounting (as opposed to a legal) perspective, the latter enterprise
is deemed to be the acquirer, and therefore the purchase method of accounting is applied to
the assets and liabilities of the enterprise issuing the shares.

These topics and the conclusions expressed have been discussed and agreed with EFRAG.

10

2002/0112 (COD)

Proposal for a

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

amending Council Directives 78/660/EEC, 83/349/EEC and 91/674/EEC on the annual
and consolidated accounts of certain types of companies and insurance undertakings

(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article
44(1) thereof,

Having regard to the proposal from the Commission1,

Having regard to the opinion of the Economic and Social Committee2,

Acting in accordance with the procedure laid down in Article 251 of the Treaty3,

Whereas:

(1)

(2)

(3)

The Lisbon European Council of 23-24th March 2000 emphasised the need to
accelerate completion of the internal market for financial services, set the deadline of
2005 to implement the Commission’s Financial Services Action Plan and urged that
steps be taken to enhance the comparability of financial statements prepared by
Community companies whose securities are listed on a regulated market (hereinafter:
“listed companies”).

On 13 June 2000, the Commission published its Communication on “EU Financial
Reporting Strategy: The Way Forward”4 in which it was proposed that all listed
companies prepare their consolidated accounts in accordance with one single set of
accounting standards, namely International Accounting Standards (IAS), at the latest
by 2005.

Regulation (EC) No […/…] of the European Parliament and of the Council […] on the
application of international accounting standards5 (hereinafter: “the IAS Regulation”)
introduced the requirement that, from 2005 onwards, all listed companies prepare their
consolidated accounts in accordance with IAS adopted for application within the
Community. It also provided an option for Member States to permit or require the
application of adopted IAS in the preparation of annual accounts and to permit or
require the application of adopted IAS by unlisted companies.

1

2

3

4

5

OJ C […], […], p. […].
OJ C […], […], p. […].
OJ C […], […], p. […].
COM (2000)359, 13.06.2000
OJ L …, p …

11

(4)

(5)

(6)

(7)

(8)

The IAS Regulation provides that to adopt an international accounting standard for its
application in the Community, it is necessary that it meets the basic requirement of
Council Directive 78/660/EEC of 25 July 1978 based on Article 54(3)(g) of the Treaty
on the annual accounts of certain types of companies6 and of Council Directive
83/349/EEC of 13 June 1983 based on Article 54(3)(g) of the Treaty on consolidated
accounts7, that is to say that its application results in a true and fair view of the
financial position and performance of an enterprise; this principle being considered in
the light of the said Council Directives without implying a strict conformity with each
and every provision of those Directives.

As the annual and consolidated accounts of undertakings covered by Directive
78/660/EEC and Directive 83/349/EEC which are not prepared in accordance with the
IAS Regulation will continue to have those Directives as the primary source of their
Community accounting requirements, it is important that a level playing field exist
between Community companies which apply IAS and those which do not.

For the purposes both of the adoption of IAS and the application of Directive
78/660/EEC and Directive 83/349/EEC, it is desirable that those Directives reflect
developments in international accounting. In this respect, the Communication of the
Commission on “Accounting Harmonisation: A New Strategy vis-à-vis International
Harmonisation”8 called for the European Union to work to maintain consistency
between Community Accounting Directives and developments in international
accounting standard setting,
in particular within the International Accounting
Standards Committee (IASC).

The annual report and the consolidated annual report are important elements of
financial reporting. Enhancement, in line with current best practice, of the existing
requirement for these to present a fair review of the development of the business and
of its position is necessary to promote greater consistency and give additional
guidance on the information content expected of a ‘fair review’. The information
should not be restricted to the financial aspects of the company’s business. It is
expected that this will lead to an analysis of environmental, social and other aspects
relevant to an understanding of the company’s development and position. This is
consistent also with the Commission Recommendation 2001/453/EC of 30 May 2001
on the recognition, measurement and disclosure of environmental issues in the annual
accounts and annual reports of companies9,

reduce
Differences in the preparation and presentation of
comparability and detract from the user’s understanding of this vital aspect of financial
reporting. Increased consistency is achieved by amendments, consistent with current
international best practice, to the specific requirements concerning the format and
content of an audit report.

the ‘audit

report’

(9)

Directive 78/660/EEC and Directive 83/349/EEC should accordingly be amended.
Consequently, it is also necessary to amend Council Directive 91/674/EEC of 19

6

7

8

9

OJ No L222, 14. 8. 1978, p. 11, Directive as last amended by Directive 2001/65/EEC (OJ No L283, 27.
10. 2001, p. 28)
OJ No L193, 18. 7. 1983, p. 1, Directive as last amended by Directive 2001/65/EEC (OJ No L283, 27.
10. 2001, p. 28)
COM 1995(508), 14.11.1995
OJ No L156, 13. 6. 2001, p. 33

12

December 1991 on the annual and consolidated accounts of insurance undertakings10.
These amendments will remove all inconsistencies between Directive 78/660/EEC,
Directive 83/349/EEC and Directive 91/674/EEC and IAS in existence at 1 May 2002.

HAVE ADOPTED THIS DIRECTIVE:

Article 1

Directive 78/660/EEC is amended as follows:

(1)

In Article 2(1) the following subparagraph is added:

“Member States may allow or require the inclusion of other statements in the annual
accounts in addition to the documents referred to in the first paragraph.”

(2)

In Article 4 the following paragraph 6 is added:

“6. Member States may allow or require that the presentation of amounts within
items in the profit and loss account and balance sheet shall have regard to the
the reported transaction or arrangement. Such permission or
substance of
requirement may be restricted to certain classes of company or to consolidated
accounts as defined in Council Directive 83/349/EEC*.

* OJ No L 193, 18.07.1983, p.1”

(3)

In Article 8 the following paragraph is added:

“Member States may allow or require companies to adopt the presentation of the
balance sheet set out in Article 10a as an alternative to those otherwise prescribed or
permitted.”

In Article 9, under ‘Liabilities’, in point B the title “Provisions for liabilities and
charges” is replaced by “Provisions”.

In Article 10, point J, the title “Provisions for liabilities and charges” is replaced by
“Provisions”.

(4)

(5)

(6)

the following Article 10a is inserted:

“Article 10a

Instead of the presentation of balance sheet items in accordance with Articles 9 and
10, Member States may allow or require companies, or certain classes of companies,
to present those items based upon a distinction between current and non-current
items provided that the information content given is at
least equivalent to that
otherwise required by Articles 9 and 10.”

(7)

Article 20 is amended as follows:

(a)

Paragraph 1 is replaced by the following:

10

OJ No L374, 31. 12. 1991, p. 7

13

“Provisions are intended to cover liabilities the nature of which is clearly defined and
which at the date of the balance sheet are either likely to be incurred, or certain to be
incurred but uncertain as to amount or as to the date on which they will arise.”

(b)

Paragraph 3 is replaced by the following:

“Provisions may not be used to adjust the values of assets.”

(8)

In Article 22, the following paragraph is added:

“By way of derogation from Article 2(1), Member States may allow or require all
companies, or any classes of companies, to present a statement of their performance
instead of the presentation of profit and loss items in accordance with Articles 23 to
26, provided that the information content given is at least equivalent to that otherwise
required by those Articles.”

(9)

Article 31 is amended as follows:

(a)

In paragraph 1(c), the point (bb) is replaced by the following:

“account must be taken of all liabilities arising in the course of the financial year
concerned or of a previous one, even if such liabilities or losses become apparent
only between the date of the balance sheet and the date on which it is drawn up,”

(b)

The following paragraph 1a is inserted:

“1a. In addition to those amounts recorded further to Article 31(1)(c)(bb), Member
States may permit or require account to be taken of all forseeable liabilities and
potential losses arising in the course of the financial year concerned or of a previous
one, even if such liabilities or losses become apparent only between the date of the
balance sheet and the date on which it is drawn up.”

(10)

In Article 33(1), the point (c) is replaced by the following:

“revaluation of fixed assets”

(11)

In Article 42, the first paragraph is replaced by the following:

“Provisions may not exceed in amount the sums which are necessary.”

(12)

The following Articles 42e and 42f are inserted:

“Article 42e

By way of derogation from Article 32, Member States may permit or require in
respect of all companies or any classes of companies the valuation of specified
instruments at amounts determined by
categories of assets other than financial
reference to fair value.

Such permission or requirement may be restricted to consolidated accounts as
defined in Directive 83/349/EEC.

Article 42f

14

Notwithstanding Article 31(1)(c), Member States may permit or require in respect of
is valued in
all companies or any classes of companies that, where an asset
accordance with Article 42e, a change in the value shall be included in the profit and
loss account.”

(13)

In Article 43(1)(6) the reference to “Articles 9 and 10” is replaced by a reference to
“Articles 9, 10 and 10a”.

(14)

Article 46 is amended as follows:

(a) Paragraph 1 is replaced by the following:

“The annual report must include at least a fair review of the development of the
company’s business and of its position.

The review shall include a balanced and comprehensive analysis of the development
of the company’s business and of its position. The information included shall not be
restricted to the financial aspects of the company’s business.

In providing its analysis,
include
references to and additional explanations of amounts reported in the annual
accounts.”

the annual report shall, where appropriate,

(b) In paragraph 2, point (b) is replaced by the following:

“the company’s likely future development including any significant uncertainties and
risks which may affect that development;”

(15)

In Article 48, the third sentence is deleted.

(16)

In Article 49, the third sentence is replaced by the following:

“The report of the person or persons responsible for auditing the annual accounts
(hereinafter: “the statutory auditors”), may not accompany this publication, but it
must be disclosed whether the audit opinion was issued with or without qualification,
or whether the statutory auditors were unable to express an audit opinion. It shall also
be disclosed whether the report of the statutory auditors included a reference to any
matters by way of emphasis to which the statutory auditors drew attention without
qualifying the audit opinion.”

(17)

Article 51(1) is replaced by the following:

“The annual accounts of companies shall be audited by one or more persons
approved by Member States to carry out statutory audits on the basis of Directive
84/253/EEC*.

The statutory auditors must also verify that the annual report is consistent with the
annual accounts for the same financial year.

* OJ No L 126, 12.05.1984, p.20”

(18)

The following Article 51a is inserted:

15

“Article 51a

1. The report of the statutory auditors shall include:

(a) an introduction which shall at least identify the annual accounts which are the
subject of the statutory audit;

(b) a description of the scope of the statutory audit which shall at least identify the
auditing standards in accordance with which the statutory audit was conducted;

(c) an audit opinion which shall state clearly the opinion of the statutory auditors as
to whether the annual accounts give a true and fair view in accordance with the
relevant financial reporting framework and, where appropriate, whether the annual
accounts comply with statutory requirements;
the audit opinion shall be either
unqualified, qualified, an adverse opinion or, if the statutory auditors are unable to
express an audit opinion, a disclaimer of opinion;

(d) a reference to any matters to which the statutory auditors draw attention by way
of emphasis without qualifying the audit opinion.

(e) an opinion concerning the consistency or otherwise of the annual report with the
annual accounts for the same financial year.

2. The report shall be signed and dated by the statutory auditors.”

(19)

Article 53(1) is deleted.

(20)

The following Article 53a is inserted:

“Article 53a

Member States shall not make available the exemptions set out in Articles 11, 27, 46,
47 and 51 in the case of companies whose securities are admitted to trading on a
regulated market of any Member State within the meaning of Article 1(13) of
Council Directive 93/22/EEC*.

* OJ L 141 , 11.06.1993 p.27”

(21)

(22)

(23)

In Article 56(1) the reference to “Articles 9, 10” is replaced by a reference to
“Articles 9, 10, 10a”.

In Article 60, first paragraph, the words “on the basis of their market value” are
replaced by “on the basis of their fair value”.

In Article 61a, the reference to “Articles 42a to 42d” is replaced by a reference to
“Articles 42a to 42f”.

Article 2

Directive 83/349/EEC is amended as follows:

(1)

In Article 1, paragraph 2 is replaced by the following:

16

“Apart from the cases mentioned in paragraph 1, the Member States may require any
undertaking governed by their national law to draw up consolidated accounts and a
consolidated annual report if:

(a) that undertaking (a parent undertaking) actually exercises dominant influence
over another undertaking (the subsidiary undertaking); or

(b) that undertaking (a parent undertaking) and another undertaking (the subsidiary
undertaking) are managed on a unified basis by the parent undertaking.”

(2)

In Article 3(1), the reference to “Articles 13, 14 and 15” is replaced by a reference to
“Articles 13 and 15”.

(3)

Article 6 is amended as follows:

(a) Paragraph 4 is replaced by the following:

“This Article shall not apply where one of the undertakings to be consolidated is a
company whose securities are admitted to trading on a regulated market of any
Member State within the meaning of Article 1(13) of Council Directive 93/22/EEC*.

* OJ L 141 , 11.06.1993 p.27”

(b) Paragraph 5 is deleted.

(4)

Article 7 is amended as follows:

(a) In paragraph 1(b), the second subparagraph is deleted.

(b) In paragraph 2(a), the reference to “Articles 13, 14 and 15” is replaced by a
reference to “Articles 13 and 15”.

(c) Paragraph 3 is replaced by the following:

“A Member State may not apply paragraphs 1 and 2 to companies whose securities
are admitted to trading on a regulated market of any Member State within the
meaning of Article 1(13) of Directive 93/22/EEC.”

In Article 11(1)(a) the reference to “Articles 13, 14 and 15” is replaced by a
reference to “Articles 13 and 15”.

Article 14 is deleted.

in Article 16(1) the following subparagraph is added:

“Member States may allow or require the inclusion of other statements in the
consolidated accounts in addition to the documents referred to in the first paragraph.”

In Article 17(1) the reference to “Articles 3 to 10” is replaced by a reference to
“Articles 3 to 10a”.

In Article 34(2)(b) the terms “Articles 13 and 14 and, without prejudice to Article
14(3),” are replaced by a reference to “Article 13 and”.

(5)

(6)

(7)

(8)

(9)

17

(10)

In Article 34(5) the words “and those excluded pursuant to Article 14” are deleted.

(11)

Article 36 is amended as follows:

(a) Paragraph 1 is replaced by the following:

“1. The consolidated annual report must
least a fair review of the
development of the business and the position of the undertakings included in the
consolidation taken as a whole.

include at

The review shall include a balanced and comprehensive analysis of the development
of the business and of its position. The information included shall not be restricted to
the financial aspects of the business.

In providing its analysis, the consolidated annual report shall, where appropriate,
provide references to and additional explanations of amounts reported in the
consolidated accounts.”

(b) In paragraph 2, point b is replaced by the following:

“(b) the likely future development of those undertakings taken as a whole including
any significant uncertainties and risks which may affect that development;”

(c) The following paragraph 3 is added:

“3. Where a consolidated annual report is required in addition to an annual report, the
two reports may be presented as a single report. In preparing such a single report, it
may be appropriate to give greater emphasis to those matters which are significant to
the undertakings included in the consolidation taken as a whole.”

(12)

Article 37 is replaced by the following:

“1. The consolidated accounts of companies shall be audited by one or more persons
approved by the Member State whose laws govern the parent undertaking to carry
out statutory audits on the basis of Council Directive 84/253/EEC*.

The person or persons
responsible for auditing the consolidated accounts
(hereinafter: “the statutory auditors”) must also verify that the consolidated annual
report is consistent with the consolidated accounts for the same financial year.

2. The report of the statutory auditors shall include:

(a) an introduction which shall at least identify the consolidated accounts which are
the subject of the statutory audit;

(b) a description of the scope of the statutory audit which shall at least identify the
auditing standards in accordance with which the statutory audit was conducted;

(c) an audit opinion which shall state clearly the opinion of the statutory auditors as
to whether the consolidated accounts give a true and fair view in accordance with the
the
relevant
consolidated accounts comply with statutory requirements; that audit opinion shall be

reporting framework and, where appropriate, whether

financial

18

either unqualified, qualified, an adverse opinion or, if the statutory auditors are
unable to express an audit opinion, a disclaimer of opinion;

(d) a reference to any matters to which the statutory auditors draw attention by way
of emphasis without qualifying the audit opinion;

(e) an opinion concerning the consistency or otherwise of the consolidated annual
report with the consolidated accounts for the same financial year.

3. The report shall be signed and dated by the statutory auditors.

4. In the case where the annual accounts of the parent undertaking are attached to the
consolidated accounts, the report of the statutory auditors required by this Article
may be combined with any report of the statutory auditors on the annual accounts of
the parent undertaking required by Article 51 of Directive 78/660/EEC.

* OJ No L 126, 12.05.1984, p.20”

(13)

In Article 38, the following paragraph 7 is added:

“7. Paragraphs 2 and 3 of this Article shall not be applied in respect of companies
whose securities are admitted to trading on a regulated market of any Member State
within the meaning of Article 1(13) of Directive 93/22/EEC.”

Directive 91/674/EEC is amended as follows:

Article 3

(1)

In Article 1, paragraphs 1 and 2 are replaced by the following:

"1. Articles 2, 3, 4(1), (3) to (5), 6, 7, 13, 14, 15(3) and (4), 16 to 21, 29 to 35, 37 to
41, 42, 42a to 42f, 43(1), points 1 to 7 and 9 to 14, 45(1), 46(1) and (2), 48 to 50,
50a, 51(1), 51a, 56 to 59, 61 and 61a of Directive 78/660/EEC shall apply to the
undertakings mentioned in Article 2 of this Directive, except where this Directive
provides otherwise. Articles 46, 47, 48, 51 and 53 of this Directive shall not apply in
respect to assets and liabilities that are valued in accordance with Section 7a of
Directive 78/660/EEC.

2. Where reference is made in Directives 78/660/EEC and 83/349/EEC to Articles
9,10 and 10a (balance sheet) or to Articles 22 to 26 (profit and loss account) of
Directive 78/660/EEC, such references shall be deemed to be references to Article 6
(balance sheet) or to Article 34 (profit and loss account) of this Directive as
appropriate.”

(2)

In Article 6, under “Liabilities”, in point E, the title “Provisions for other risks and
charges” is replaced by “Other provisions”.

(3)

Article 46 is amended as follows:

(a) In paragraph 5, the following subparagraph is added:

“Member States may permit derogations from the first subparagraph.”

19

(b) Paragraph 6 is replaced by the following:

“The method(s) applied to each investment item shall be stated in the notes to the
accounts, together with the amounts so determined.”

Article 4

Member States shall bring into force the laws, regulations and administrative provisions
necessary to comply with this Directive by […] at the latest. They shall forthwith inform the
Commission thereof.

When Member States adopt those provisions, they shall contain a reference to this Directive
or be accompanied by such a reference on the occasion of their official publication. Member
States shall determine how such reference is to be made.

This Directive shall enter into force on the twentieth day following that of its publication in
the Official Journal of the European Communities.

Article 5

Article 6

This Directive is addressed to the Member States.

Done at Brussels, […]

For the European Parliament
The President
[…]

For the Council
The President
[…]

20

LEGISLATIVE FINANCIAL STATEMENT

Policy area(s): Internal Market

Activit(y/ies): Financial reporting

TITLE OF ACTION: PROPOSAL FOR A DIRECTIVE AMENDING THE COUNCIL DIRECTIVES

78/660/EEC, 83/349/EEC AND 91/674/EEC

1.

BUDGET LINE(S) + HEADING(S)

None

2.

OVERALL FIGURES

2.1.

Total allocation for action (Part B):

€

million for commitment

No impact.

2.2.

Period of application:

N/A

2.3.

Overall multiannual estimate on expenditure:

N/A

2.4.

Compatibility with the financial programming and the financial perspective

N/A

2.5.

Financial impact on revenue:

N/A

3.

BUDGET CHARACTERISTICS

N/A

4.

LEGAL BASIS

Article 44(2)(g) of the EC Treaty.

21

5.

DESCRIPTION AND GROUNDS

5.1.

Need for Community intervention

Council Directives 78/660/EEC, 83/349/EEC and 91/674/EEC (together ‘the Accounting
Directives’) have remained largely unchanged since their issue as much as 23 years ago. In
this period accounting theory and accepted practice have developed significantly and continue
to do so.

Numerous studies have been prepared or received by the Commission which indicate that, in
many respects, the Accounting Directives remain consistent with current accounting theory
and practice. However, in certain limited areas, their requirements are incompatible with
International Accounting Standards (IAS) which the EU will seek to adopt further to the IAS
Regulation1. This situation is unacceptable for two reasons:

Firstly, if the Accounting Directives are to play an important role in the mechanism for
adopting IAS under the proposed IAS Regulation, they must reflect current accounting
developments.

Secondly, there must be a level playing field between companies which apply IAS and those
which do not.

The objectives of this proposal are therefore threefold:

(1)

(2)

(3)

To remove all conflicts between the Accounting Directives and IAS;

To ensure that optional accounting treatments currently available under IAS are
available to EU companies which continue to have the Accounting Directives as the
basis of their accounting legislation (i.e. those companies which do not prepare their
annual or consolidated accounts in accordance with adopted IAS further to the IAS
Regulation); and

To update the fundamental structure of the Accounting Directives so that they provide
a framework for financial reporting that is both consistent with modern practice and
flexible enough to allow for future developments.

In achieving these objectives, the proposals are designed to allow Member States to amend
their national accounting requirements in respect of companies subject to the Accounting
Directives in a manner and at a pace appropriate to national circumstances. This is achieved
by the introduction of additional accounting requirements by way of Member State options
and no reduction of accounting options available at present.

the proposals will have no accounting impact other

Accordingly,
than that deemed
appropriate by individual Member States. This is considered essential due the interaction of
accounting requirements with fiscal and other areas, notably in the case of annual accounts.

5.2.

Actions envisaged and arrangements for budget intervention

N/A

1

COM (2001)80

22

5.3.

Methods of implementation

Member States shall bring into force the laws, regulations and administrative provisions
necessary to comply with these Directives. They shall forthwith inform the Commission
thereof.

6.

FINANCIAL IMPACT

No impact.

7.

IMPACT ON STAFF AND ADMINISTRATIVE EXPENDITURE

The necessary human and administrative resources will be covered within the budgetary
allocation attributed to the managing DG.

8.

FOLLOW-UP AND EVALUATION

When Member States adopt these new provisions, they shall contain a reference to these
Directives or be accompanied by such a reference on the occasion of their official publication.
They shall forthwith inform the Commission thereof.

9.

ANTI-FRAUD MEASURES

Given the nature of the action, no specific fraud prevention measures are necessary.

23

IMPACT ASSESSMENT FORM

THE IMPACT OF THE PROPOSAL ON BUSINESS WITH SPECIAL REFERENCE
TO SMALL AND MEDIUM-SIZED ENTERPRISES( SMEs)

I. TITLE OF PROPOSAL

Proposal for a Directive of the European Parliament and of the Council amending Council
Directives 78/660/EEC, 83/349/EEC and 91/674/EEC (together ‘the Accounting Directives’).

II. DOCUMENT REFERENCE NUMBER

COM(2002)259

III. THE PROPOSAL

1. It is proposed to amend the Accounting Directives to bring them in line with current
international theory and practice. The objectives and proposals are explained more fully at
point 5 of the Legislative Financial Statement above.

IV. THE IMPACT ON BUSINESS

2. Who will be affected by the proposal?

The precise scope of the existing Accounting Directives is stated in detail in those Directives.
The proposals do not amend the scope of those Directives. Accordingly, the proposals will
affect entities falling within the scope of the existing Accounting Directives, i.e. all entities
that prepare their consolidated and/or annual accounts in accordance with the Accounting
Directives.

3. What will business have to do to comply with the proposal?

The proposals are designed to allow Member States to amend their national accounting
requirements derived from those Accounting Directives in respect of these companies in a
manner and at a pace appropriate to national circumstances. This is achieved by the
introduction of additional accounting requirements by way of Member State options and no
reduction of accounting options available at present. Accordingly, the proposals will have no
accounting impact other than that deemed appropriate by individual Member States. This is
considered essential due the interaction of accounting requirements with fiscal and other
areas, in particular in the case of annual accounts.

In addition to the consolidated (and/or annual) accounts, the Accounting Directives have
previously required companies above a certain size to produce a consolidated (and/or annual)
report giving a fair review of the business. In the proposal, this requirement has been retained
and enhanced in line with current best practice. This will result in a more comprehensive
report including information relevant to a wider group of stakeholders – ie it shall not be
limited solely to financial aspects of the business.

It is expected that this Directive should be adopted by Council and Parliament at the latest in
2002. As these proposals are associated with the proposals for the use of IAS in the
consolidated accounts of certain listed companies from 2005 onwards, this will provide
Member States, companies and the accounting profession a reasonable transition period to

24

prepare themselves before the implementation of the proposal for the use of IAS from 2005.
Such preparation may necessarily include the recalculation of amounts reported prior to 2005
in accordance with new requirements where these amounts affect either opening balances
under the revised requirements or comparatives reported in periods to which the revised
requirements are applied.

As noted above, the proposals require very few changes being designed (by the use of
Member State options)
to allow Member States to amend their national accounting
requirements derived from those Accounting Directives in respect of these companies in a
manner and at a pace appropriate to national circumstances. Any additional costs for
companies will be dependent mainly upon the extent to which Member States introduce
changes in implementing the Member State options in the proposals. Those costs which arise
will generally be in the area of training staff to deal with any revised accounting requirements.

4. What economic effects is the proposal likely to have?

The proposal to update the Accounting Directives will provide a framework for financial
reporting that will enhance the comparability and transparency of financial information,
thereby increasing the efficiency of the markets and reducing the cost of capital for
companies.

5. Does the proposal contain measures to take account of the specific situation of small and
medium-sized firms (reduced or different requirements etc)?

As noted above, the proposals are designed to allow Member States to amend their national
accounting requirements derived from those Accounting Directives in a manner and at a pace
appropriate to national circumstances. Accordingly, the proposals will have no accounting
impact other than that deemed appropriate by individual Member States.

A number of derogations already exist in respect of entities which are below certain size
criteria included in Articles 11 and 27 of the Fourth Directive (78/660/EEC). These lessen the
burden of disclosure for such companies and remain appropriate. It is n,ot proposed to amend
the existing derogations or the size thresholds at which they are available, other than to
require that they are not available to listed companies. This is a necessary clarification,
consistent with the proposal for the use of IAS by such companies, which will have no effect
in practice as listed companies would almost certainly be too large to meet the basic criteria in
any event.

V. CONSULTATION

6. The proposals have been discussed in the Contact Committee and received wide support.

In addition, the Technical Expert Group of EFRAG (European Financial Reporting Advisory
Group) has considered the proposals and confirmed that they achieve their primary objective
of removing all conflicts between the Accounting Directives and IASs in issue at 1 May 2002.

EFRAG comprises a Technical Expert Group and a Supervisory Board. The Technical Expert
Group represents the main private sector groups closely involved in financial reporting,
namely the European accounting professions, stock exchanges,
financial analysts and
institutions and insurers). The EFRAG
companies preparing accounts (including credit
Supervisory Board monitors the work of the Technical Expert Group and assures that the
individual members work in the European interest.

25

The involvement in EFRAG of the experts from European organisations is the best guarantee
the European interest will be considered properly. These organisations are: FEE
that
(accounting profession), UNICE (industry), ECSAs (banking), CEA (insurance), FESE (stock
exchanges), EFFAS (financial analysts), EFAA (auditors for small and medium-sized
enterprises) and UEAPME (small and medium-sized enterprises).

26