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Conceptual and Technical Study Regarding Futu re Accou nting Regulation for
SMEs in Eu rope
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19
Conceptual and Technical Study Regarding Future Accounting Regulation for SMEs in EuropeConceptual and Technical Study Regarding Future
Accounting Regulation for SMEs in Europe
/g110
Adela Deaconu
Irimie Popa
Anuța Buiga
Melinda Fulop
Babeș-Bolyai University, Cluj-Napoca
Abstract. The economic theories and the accounting regulations deriving
from them should be reconsidered for SMEs. At global level, there are accom-
plishments in this respect – IASB IFRS for SMEs – or intentions – European
Commission proposals for certain simplifications of the European directives.However, for these actions to be successful, further investigations concerning
the theoretical and technical implications are necessary. In this study, we present
our opinion concerning the theoretic influences (reconsideration of the con-ceptual framework) and the technical influences (change in the disclosure re-
quirements and change in the content of the standards, namely recognition
and valuation) implied by a standard for SMEs.
Key words: SMEs accounting standard; agency theory; shareholder-manager;
stakeholders; IFRS for SMEs.
/g110
JEL Codes: M48.
REL Codes: 13H, 14K.

Theoretical and Applied Economics
201. Introduction
The need for a unique and simplified
standard for SMEs was expressed with a
higher and higher voice in recent years.
First of all, it is IASB which felt this need,
as a consequence of the complexity of the
full IFRS and of the different reporting
requirements in the other countries than theUS, whose accounting standards had inspired
the international standards.
In June 2004, IASB published a
discussion paper containing its proposals to
develop a separate set of standards for SMEs.
(Pacter, 2007). The project is expected to endin the fourth quarter of 2008.
At conceptual level , there are reserves
on the capacity of the IASB conceptualframework to reflect the different objectives
of the stakeholders of the proposed SME
standard (SMES) and which is based on thesame principles as the full IFRS. The skeptics
about the usefulness of an international
standard for SMEs show that IASB shouldhave paid more attention to the needs of the
stakeholders and should have had a „more
conceptual” approach in order to take intoconsideration the different objectives of a
„differentiate accountancy” (Epstein,
Jermakowicz, 2007).
At technical level , IASB proposes a
change in the publication requirements, as
well as a change in the content of thestandards, more precisely, acceptance and
assessment. Moreover, the wording of the
project was reformulated in English in orderto simplify the expression and to facilitate
the translation.
As far as Europe is concerned, the
European Commission, through itsCommittee for Accounting Regulation,
launched a topic of discussion on thesimplification of the accounting rules for
SMEs and possible amendments to the IVth
and VIIth European Directives during itsmeeting in November 2006 (European
Commission, 2006). The solution aimed was
introducing new rules, more relevant, whichshould replace the old ones, more complex
and heavy.
The European specialists are not willing
to take over the IASB standard for SMEs
(IFRS for SMEs) as such for the Members
States and their accounting systems(Deaconu et al., 2007). The European
simplification process was based on a
questionnaire addressed to the standardsetters from the Member States. On the basis
of this questionnaire, the European
Commission launched a communicationregarding its vision on the simplification of
the Community company law, accounting
and auditing (July 2007).
In the end, the opinions expressed in the
European literature on the reasons for a
standard dedicated to SMEs coincide withthe declared intentions of the European
Commission. However, the analysis in the
literature are deeper and recommend a betterjustification, based on studies on how IASB
or the European Commission should
conceive such a standard (Evans, 2005).Moreover, the academic world and the
professional associations recommend the
launch of studies concerning a preciseknowledge of the stakeholders and of their
needs related to the reporting of a SME, since
such studies are not sufficient at present.
Other studies performed in certain
European countries mention the fact that a

21
Conceptual and Technical Study Regarding Future Accounting Regulation for SMEs in Europepotential standard for SMEs, either
international or European, should also takeinto consideration a changement of the
accounting conceptual framework.
At a technical level, the progress of the
European process of simplifying the
accounting standards for SMEs has raised
problems related to the identification of theaccounting information important for the
SMEs, to the opportunity of increasing the
size threshold for qualifying an entity as aSME, to expand the exceptions from
application of present directives for SMEs,
to the amendment and elimination of certainoptions, to the simplification of the
accounting rules for SMEs, to the reduction
of disclosure obligations.
2. Related studies and research
methodology
In order to develop the topic, we have
opted at the same time for an external
approach (by studying specialized literature
and regulations) and for an internal approachthat consists in presenting the point of view
of an EU Member State.
The studies we have used are, first of
all, of technical nature, represented by the
provisions on SMEs from the Fourth
European Directive and other Europeanlegislative acts defining the EU policy for
SMEs, namely the investigation launched by
the European Commission on November2006 by consulting the Member States on
simplifying the Fourth Directive or even
establishing a separate set of standards forSMEs. Secondly, we have used a study on
the financial reporting standards launched by
the EAA Committee presenting theconclusions of a revision of the literature
concerning the implications of a standard forSMEs in Europe (Evans, 2005), as well as
other studies from the specific literature
directly consulted.
To the conclusions resulted from the
analysis of the documents, we have added
the conclusions reached through a case studyon the Romanian market, and which was
based on a questionnaire-based survey
technique.
Our research is a theoretic study with
technical aspects, using the archival research
and a field study as a method of datacollection. The data collected through the
questionnaire-based study were treated with
SPSS software, version 16 for Windows,which allowed us to apply descriptive
statistics techniques, statistics significance
testing techniques, and correlation analysistechniques (Chi-square, Contingency
Coefficient).
3. Conceptual aspects implied by a
standard for SMEs
In order to develop technical aspects
related to a standard for SMEs, it is firstnecessary to make clear the conceptual
aspects. By conceptual aspects we
understand the manner in which theobjectives and users of the accounting
information produced by a SME should be
defined.
Usually, the accounting standards are the
resultant of the accounting theory (1), the
accounting objectives (2), and the interestsof the main groups of stakeholders (3). As
far as the accounting needs of a SME are
concerned, we think that the accounting

Theoretical and Applied Economics
22theory (1) is the same for all entities, namely
the definition of the accounting concepts andthe basic accounting principles. But, it is
necessary to have a different look on the
accounting objectives (2) and on the currentnormative principles deriving from them
(e.g., substance over form, materiality), as
well as on the main groups of stakeholdersand their interests (3).
We consider that SMEs rather seek to
survive and to be stable than to maximizetheir profit, and, maybe, to register the
increase necessary to one shareholder.
Moreover, the stakeholders of SMEinformation are not represented by the mass
population, but by the shareholder-manager,
the State, and, maybe, one or two creditors.
As far as the stakeholders of SME
information are concerned, the opinions
expressed in the specialized literatureconverge. Thus, it is stated that in the case
of SMEs, the agency role played by the
accounts is limited to the relationshipshareholder-manager and bank, and the
management function is usually absent in the
case of small companies (Collis, Jarvis, 2000,Hamilton, Lawrence, 2001, quoted by Evans
et al., 2005).
In exchange, there are differences in
approaching the accounting conceptual
framework appropriate for SMEs. Certain
authors support the development of aconceptual framework specific to SMEs
(Collis, Jarvis, 2000, Hamilton, Lawrence,
2001, quoted by Evans et al., 2005).According to other opinions, it would be
sufficient to have only one conceptual
framework, and, consequently, only one setof financial statements that should answer
all needs, with differences only in thereporting methods according to sector, tax
requirements and size of the company(Zappa, 1950, Amodeo, 1970, Ferrero, 1991
quoted by Evans et al., 2005). However, there
is an almost overall consensus that it isunlikely for the IASB conceptual framework,
on which its project for SMEs is based, to
have universal (European) validity.
In our opinion, an accounting
conceptual framework should contain, first
of all, elements specific to the accountingtheory, and, then, accounting objectives and
normative principles developed on the basis
of these elements. Starting from this, weconsider that there should exist, with no
doubt, differences related to the accounting
objective and principles of SME accountancy(a). It would be good to perform this through
an unique conceptual framework addressed
to big companies as well as to SMEs, butthat should contain differences related to the
latter. In geographical terms, we are not for
an unique conceptual framework, but forseveral conceptual frameworks, because of
cultural diversity (b).
(a) There should be a standard specific
to SMEs or the existent standards for big
companies should be simplified, because the
accounting objective and the informationstakeholders are different. We argue for this
by using the classical theory of the firm, of
the entrepreneur or of the shareholder-manager, supported by Jensen and Meckling
(1976) and by Alchian and Demsetz (1972),
quoted by Foss et al. (1999). This type offirm has a contractual structure that includes
joint input production, several input owners,
one party which is common to all thecontracts of the joint inputs, who has the right
to renegotiate any input’s contract

23
Conceptual and Technical Study Regarding Future Accounting Regulation for SMEs in Europeindependently of contracts with other input
owners, which holds the residual claims andwho has the right to sell his central
contractual residual status (Fama, 1980). All
this has been demonstrated by the partialresults of the questionnaire-based
investigation presented in this study
(Deaconu et al., 2008).
(b) we do not recommend an unique
standard for SMEs for all accounting systems
(e.g. IASB) because of the cultural diversitythat has stronger impact within the SMEs that
usually have no international links and no
strong need for a common language (wehave a different opinion when talking about
big multinational companies). We also
support this by the results obtained from thequestionnaire processing in the case of
Romania (point 4.2.).
Various studies have proven the impact
of the cultural diversity at economic (and
hence accounting) level. For instance, Palich
and Gomez-Mejia (1999) show thatculturally related international firms will
enjoy greater efficiencies than culturally
diverse multinationals.
4. Technical aspects implied by a
standard for SMEs
4.1. Technical aspects identified in
international and European regulations
On the basis of our analysis, we have
synthesized the following conclusionsrelated to the IASB standard for SMEs
(Deaconu, 2006):
a) There are two approaches concerning
the content of the standards for SMEs, out
of which a reduced version of IFRS was
chosen.Consideration was given to a series of
simplifications concerning the recognitionand assessment, as well as the simplification
of the presentations and descriptions
according to the needs of the stakeholdersand to the consideration of the cost efficiency
level, according to the IASB general
framework.
b) Full IFRS simplification was
materialized in: eliminating topics not
relevant, eliminating certain choices ofaccounting treatments and simplifying
methods for recognition and measurement.
Among the elements eliminated from the
full IFRS set, there are (Epstein,
Jermakowicz, 2007): general price-level-
adjusted reporting in a hyperinflationaryenvironment, equity-settled, share-based
payment or interim reporting. Here are some
examples of elimination of certain options:the direct method for reporting operating
cash-flow, capitalization of borrowing costs
or the fair value model for investmentproperty. As far as recognition and
measurement are concerned, the
simplifications were made for: financialinstruments, derecognizing, goodwill
impairment and other 10 elements.
On the other hand, in the discussion
paper launched by the European
Commission in July 2007, there are the
conclusions of the preliminary analysisperformed in several Member States which
demonstrate that in the field of company,
including SME, accounting and auditing, theadministrative costs determined according to
the Community legislation are rather high.
The communication presents as mainmeasures proposed by the Commission
(European Commission, 2007c): either the

Theoretical and Applied Economics
24repeal of the directives on company law
concerning essentially the nationalsituations, or the repeal of certain mandatory
information requirements; a simplification of
the requirements related to informationapplied for companies and their subsidiaries;
a new reduction in requirements related to
financial information and auditing ofaccounts for SMEs. In concrete terms, it is
proposed to perform a differentiation of the
European entities according to sub-criteriarelated to size, and according to the type of
stakeholders. In the first case, there are
micro-companies and small entities withinthe SMEs which are suggested to be excluded
from the application of the accounting
directives, and, respectively, from theobligation to disclose accounting
information. In the second case, there is a
distinction between the SMEs with a smallnumber of external stakeholders, for which
there are proposals of simplifications that
were specific to small entities. Eventually,there are proposals of simplifications of the
directives applicable to all SMEs, relating to:
consolidation, deferred tax, and eliminationof disclosure obligations.
4.2. Case study management
The case study was performed using the
questionnaire technique. The sample consists
of 72 entities performing an economicactivity. The management period lasted from
October 200 to January 2008. The structure
according to field activity is 30% production,30% trade, 20% building, and 20% services.
The respondents were the accounting
professionals, usually employees of theentity, who know the issue of our study as
well as the information needs of the entity.The answers were collected directly by a team
coordinated by the authors of this study. Thegeographic distribution was not taken into
consideration, and the subjects were not
selected randomly, but followingobservations concerning the fulfillment of
the criteria related to size, and according to
data accessibility.
Before drafting the questionnaire, a
preliminary survey was performed,
consisting of discussions with certain SMEs.Following the preliminary survey, the
interviewees were offered for consultation
an explanatory document concerning theintentions of the research, and the current
situation of the issue under study, his
definition of certain concepts, and thepresentation of certain explicit classification
criteria. This approach was meant to assure
preciseness and relevance of the answers.
The structure of the questionnaire
consists of the presentation of the objective
of the action, of the international contextconcerning the issue, of the situation in
Romania concerning the SMEs in relation to
the international accounting standards andto the European directives, of the adopted
classification criteria for SMEs.
A first set of questions meant to define
the profile of the respondents; 6 questions
refer to the explanatory variables of the
respondents’ attitude concerning theopportunity and way of designing a standard
specific for the SMEs, namely the average
number of employees, annual turnover, totalamount of assets, ownership structure (privat
or public), number of shareholders with
mention made if the shareholders or oneshareholder are/is also manager(s) of the
entity, main financing resource.

25
Conceptual and Technical Study Regarding Future Accounting Regulation for SMEs in EuropeA second set of questions made it clear,
on the one hand, the practical aspectsconcerning a standard for SMEs, and which
are not developed in this study. On the other
hand, there are questions meant to clarify thetechnical aspects related to the classification
as SME, and the content of a specific
standard. In concrete terms, these questionsdealt with the opportunity to increase the
thresholds for classifying an entity as SME,
the method of applying in Romania thesimplifications proposed to the entities by the
regulations in force, the existence of new
possibilities for simplification, the possibleapplication by SME of IFRS or of treatments
recommended by IFRS, the statement of
SMEs objectives, the optimum structure forSMEs.
4.3. Results of the research on the
Romanian market
Among the questions in the
questionnaire, this study is interested in thetechnical questions, specifically dealing with
concrete solutions/proposals for
simplification. These questions have beencorrelated and statistically tested with the
explanatory variables from the first set of
questions of the questionnaire. In some ofthe tests, statistical relevance was found, as
well as more or less strong dependency,
demonstrated for our sample, of the opinionsconcerning the SMEs on the characteristics
of the interviewees. Beside the demonstrated
correlations, our interpretation is based ondescriptive statistics elements. All these led
us to the following statements, presented in
groups, according to sets of questions(elements) having the same objective. Thus,
we have:4.3.1. Questions testing the opportunity
to adopt the standard for SMEs suggestedby IASB
The general opinion is that a standard
for SMEs or, at least, the simplification ofthe current accounting regulations would be
appropriate. However, the IASB solution of
such a standard is rejected, which is anotherargument in favor of our idea expressed in
this study, namely the cultural and
accounting system differences, whichimposes prudence when adopting IFRS for
SME in Europe.
One of the instruments that support the
idea to reject the IFRS for SME is the question
concerning its structure, for which we
suggested three options, i.e. according to thechart of accounts, to the nature of the
elements in the financial statements, and to
the IFRS structure. After analyzing all thecorrelations of this variable with all the
explanatory variables, it is found that the
structure according to IFRS is generallyrejected. The other two classifications were
preferred, with a relatively equal number of
opinions. Thus, the older SMEs, which knowbetter the evolution of the accounting
standards (Figure 1), whose main financing
resources are their own capitals, and whichhave less than 5 shareholders, have opted in
favor of the classification according to the
nature of elements. Then, the classificationaccording to the chart of accounts, namely
turnover (Table 1), total assets, and number
of employees, was the option of the smallestSMEs, differentiated according to
quantitative criteria, present also in Romania,
and which represent the European mentality,also traditional in Romania.

Theoretical and Applied Economics
26Figure 1. Options concerning the SMEs standard structure in correlation with the age of the entity
theoretical value of 0.05), but of lesser intensity,
with a contingency coefficient C of 0.333.2001-2005 1993-2000 untill 1992Count12,5
10,0
7,5
5,0
2,5
0,0According to the
IAS/IFRS structure
(per cases, for
instance Leasing,
Combinations of
companies)According to the
nature of the elements in the
financial
statements According to the
chart of accountsWhich should be the
structure/organization
of the content of the
regulations concerning
the SMEs?
Between the two variables there is a statistical
relation (sig = 0.054, which is close to the
Options concerning the SMEs standard structure in correlation with their size measured
according to turnover
Table 1
Which should be the structure/organization of the content of the regulations
concerning the SMEs?
According to
the chart of
accounts According to the
nature of the elements
in the financial
statements According to the IAS/IFRS
structure (per cases, for instance
leasing, combinations of
companies) Total
<2000000 EUR 30.2% 27.0% 4.8% 61.9%
2000000-5000000 EUR 9.5% 6.3% 7.9% 23.8%
5000001-7300000 EUR 4.8% 4.8% Annual
turnover

>7300000 EUR 3.2% 6.3% 9.5%
Total 42.9% 44.4% 12.7% 100.0%
The correlation has a statistical
significance (as in the case of one of the other
quantitative criteria, i.e. the average number
of employees), where χ2 = 13.043, and
sig = 0.042. The intensity of the relation is
given by the value of C, i. e. 0.407.
Another instrument that supports the
idea to reject IFRS for SME is related to the
implementation of IFRS in parallel with thenational accounting regulations, whichcomply with the European directives (Order
of the Minister of Public Finances no. 1752/
2005). IFRS implementation in Romania is
optional, and it is mandatory only for thefinancial institutes and listed companies. The
answer of 99% of the SMEs to the question
concerning the implementation of IFRS wasnegative. This proves the fact that SMEs are
not familiar with IFRS, hence the difficulty
to adopt IFRS for SME.

27
Conceptual and Technical Study Regarding Future Accounting Regulation for SMEs in Europe4.3.2. Questions testing the objectives
and the structure (content organization) ofa SME
The purpose of the first question was to
receive free answers concerning theobjectives of a SME. Out of the valid
answers, 62% are explicit answers, while the
other interviewees have not given an answer.The most frequent reason for that was their
lack of information on the subject. The
classification of the answers in homogenousclasses determined the following findings:
90% of the answers present the objectives
of a SME in close relation with thesimplification of the current regulations in
order to make them really useful for their
direct addressees. The other answers focuson the accounting simplification in
correlation with the separation from taxation
and legal regulations. The answers thatdeclare simplification as a main objective
take into consideration the unitary
understanding of terms and, hence, businessdevelopment, decrease of bureaucracy,
better image of patrimony and performance.
In these answers, the beneficiaries ofsimplification are either the shareholders, or
the state, as direct stakeholders, or the
accounting profession. There are answersconcerning the method of simplification:
disclosure (25%), content (25%), disclosure
and content of the financial statements (10%).
The second question is the one analyzed
under point 4.3.1. above, concerning the
structure of the content of a SME. Thus, itwas opted for the classification according to
the nature of the elements in the financial
statements. The structure according to thechart of accounts was also preferred. It can
be seen that there is a mixture of traditionalmentality (according to the chart of accounts)
and modern mentality, according to thenature of elements, which shows, in our
opinion, a better professional ability of the
interviewees (accounting experts).
4.3.3. Questions testing the simplifica-
tion method of the current accountingregulations in Romania
These questions were further grouped
according to their message into threesubcategories, i.e. questions related to the
simplification of standards in general,
questions related to exemptions concerningcertain accounting treatments, and,
eventually, questions referring to actions on
the requirements in current regulations. Thus,we have:
A. Questions concerning the simplifica-
tion of standards in general
We have included here the opinion of
the interviewees concerning the opportunityto increase the threshold for classifying an
entity as SME, so that as many entities as
possible should use simplified accounting.If we analyze the treatments concerning the
correlation between this question and the
characteristics of the interviewed entities, wecan find a predominant positive answer (see
for example Table 2). Thus, the option for
an increase in the number of entities thatshould benefit from simplifications is
unanimous, with one exception concerning
the “financing resource” explanatoryvariable. In this case, the SMEs financed
from own capitals are in favor of increase,
while the entities whose main financingresource is the financial credit are against it
(only 30% as compared to 70% represented

Theoretical and Applied Economics
28by the entities financed from own capitals).
This fact proves the separation from theprudence judgment, which is based on asmany and as explicit accounting rules as
possible for the SME financed from ownresources (Figure 2).
Correlation between the option to increase the number of entities that should use simplified
regulations and the size of the entity expressed as average number of employees
Table 2
Do you think that the thresholds for classification as a SME should be
increased so that as many entities as possible could take advantage of
the simplification of the accounting regulations?
NO YES Total
0-49 26.1% 36.2% 62.3%
50-99 8.7% 7.2% 15.9%
100-149 4.3% 1.4% 5.8%
150-199 4.3% 4.3% Ave-rage employ-yee
number

>200 2.9% 8.7% 11.6%
Total 46.4% 53.6% 100.0%
If we consider a risk level of 10%, we
can state that there is a statistical relationship
between the variables ( χ2 = 8.17 andsig = 0.085 < 0.1, which means below the
maximum accepted amount).
Figure 2. Correlation between the option to increase the number of entities that should use simplified
regulations and the main financing resourceSUBSIDIES BANK LOANS EQUITY 30
20
10
0
YES NODo you think
that the
thresholds for
classification
as a SME
should be
increased so
that as many
entities as
possible could
take advantage
of the
simplification of
the accounting
regulations?
B. Questions concerning exemptions
related to the accounting treatments
One of the first questions of the
questionnaire referred to 5 types of exemptionsprovided for in the Romanian regulations, i.e.
the possibility to produce simplified financialstatements (a), application of the principle of
substance over form in the case of these entities
only for their consolidated accounts (b), the
possibility to report less information in theexplanatory notes (c), lack of obligation to apply
the materiality principle (d), lack of obligation

29
Conceptual and Technical Study Regarding Future Accounting Regulation for SMEs in Europeto audit the financial statements (e). (Table 3).
The statistical treatment analysis shows that allexistent exemptions have been used, but,
generally, (a), (c) and (e) were preferred. A
deeper analysis on the basis of the explanatoryvariables leads us to further remarks:
/g110The smallest entities (according to thetotal assets), i.e. the SME with publiccapital (only 8% of the total analyzed
entities) have preferred the exemption
from the application of the materialityprinciple;
/g110SMEs with more than 15 shareholdershave considerably used the exemptionconcerning the lack of application of
the principle of substance over form,
which might indicate that the entitieswith more shareholders give more
attention to accounting.
A second question related to exemptions
concerning accounting treatments refers to
new exemptions wanted by the interviewees
beside the existing ones. The answers werefree and indicated a generalized affirmative
answer for all explanatory variables. Among
these answers, the strongest one is the answerconcerning the correlation according to the
age of the entities (Table 4).
Options for SMEs concerning the exemptions
offered by current regulations
Table 3Options for SMEs concerning new exemptions
applicable beside the current regulations,
considering the age of the entities
Table 4
Responses
N Percent
a. The possibility to produce simplified
financial statements 47 29.6
b. The principle of substance over form that
is applied to these entities only for their
consolidated accounts 19 11.9
c. The possibility to report more limited infor-
mation than the information required from
big entities within the explanatory notes 42 26.4
d. Lack of obligation to apply the materiality
principle 17 10.7
e. Lack of obligation to audit the financial
statements 34 21.4
Total 159 100.0 Would there also be other
exemptions that the
regulations s hould fo resee?
NO YES Total
until 1992 3 17 20
1993-2000 10 11 21

2001-2005 9 10 19
Total 22 38 60
The correlation has a statistical
significance with χ2 = 6.599 and sig = 0.037.
The intensity of the relation id given by thecontingency coefficient C = 0.303.
C. Questions concerning actions on
current accounting requirements
We have included here the question
concerning the exemptions from certain
accounting treatments referring to the
opportunity to provide for other exemptionsin the future. We have suggested the
interviewees the following possibilities:
alternative treatment concerning changes inthe accounting policies and correction of
fundamental mistakes (1), more permissive
activation of the development expenditure(2), extended capitalization of interest
expenditure (3), inapplication of the fair
value concept (4). The interviewees declaredthemselves in favour of new exemptions,
mainly the ones we suggested. The answer
is suggestive within the correlation of thevariable with the age of the entities (Table
5). Besides, we give other findings:
/g110Usually, the order of preference is (2),
(3), and (4);
/g110inapplication of the fair value ispreferred by older SMEs, with better

Theoretical and Applied Economics
30accounting experience, and it is
situated on the second place after ahigher permissivity for the activation
of the development expenditure;
/g110Medium-size SMEs also support the
simplification concerning the treatmentof the change in the accounting policies
and in the correction of errors;
/g110SMEs with private capital and the ones
with less than 5 shareholders are the
strongest supporters of inapplicationof the fair value.
until 1992 1993-2000 2001-2005 Total
Count
4 8 8 20 Changes in the accounting policies and
correction of fundamental mistakes, which
should be treated in such a way as to
avoid their contradiction with the principle
of intangibility of the opening balance
sheet; % within
variables 12.9% 20.5% 22.9%
Count 10 12 8 30 The development expenditure, for which
the activation conditions should be more
permissive than in the case of big
companies, in order to facilitate their
development; % within
variables 32.3% 30.8% 22.9%
Count 8 9 11 28 The interest expenditure, for which
capitalization should be allowed not only
for fixed assets obtained within a long
production cycle, but also for the other
fixed assets; % within
variables 25.8% 23.1% 31.4%
Count 9 10 8 27 Options

(1)

(2)

(3)

(4) The fair value, a very complex concept,
with multiple time – and financial effort
consuming practical solutions, should not
be required in the case of SMEs; % within
variables 29.0% 25.6% 22.9%
Total Count 31 39 35 105 Options of SMEs concerning future simplifications of the accounting regulations
Table 5
Percentages and totals are based on
responses.
a. Dichotomy group tabulated at value 1.
b. There is not enough (less than 2)
multiple response groups for pairing.Percentages are based on responses, but no
pairing is performed.
5. Conclusions
This study debates and concludes on a
standard specific for SMEs. It is focused onconceptual and technical aspects.
On the basis of our analysis of theory,
accounting standards and literature dedicatedto SME accounting – which is very limited
at present – we show that, within the existentconceptual framework, it is necessary to
interpret normative objectives and principlesspecific to SMEs. They require a simplified
accounting system due to the specific
stakeholders and their needs.
The technical aspects are clarified
through analysis of documents (IASB
project for SME, European Commissionand Member States documents concerning
the European project for the simplification
of rules applicable to SMEs), and througha questionnaire-based survey launched on
the Romanian market. The conclusions of
the research can be summarized as follows:it is not appropriate to adopt IFRS for SME
in Europe because of the cultural diversity
and of the variety of accounting systems;

31
Conceptual and Technical Study Regarding Future Accounting Regulation for SMEs in Europeit is necessary to perform content and
reporting simplifications of SMEaccounting and to increase the threshold
for those to which they are addressed; the
Romanian market presents other technicaloptions as well, i.e. structuring of SME
specific regulations according to the nature
of elements rather than according to thechart of accounts, the increase of the
number of exemptions and simplifications
of certain accounting treatments ascompared to the existing ones.
The limits of the case study are as
follows:
/g110we cannot state that the results of the
enquiry can be generalized at the level
of Romania; many of the respondents’answers are very balanced without
determining a quantifiable statistical
significance, which is due, in ouropinion, to the topicality of the subject
for the Romanian practice. The
Romanian accounting standards are inline with the European directives since
1 January 2006, and the simplifications
for SMEs proposed by the directiveshave been taken over only 10.4%
(European Commission, 2007d);/g110The respondents are accounting
professionals and we started from theprerequisite that they represent all the
stakeholders and their needs, but we
have not tested this assumptionpreviously.
Acknowledgements
This paper is the result of A 1386
research research project granted by
Romanian Research and Teaching Institution
(CNCSIS) which was achieved in the years2005-2007. Partial results of this research
were published in 3 papers in the last two
years. The present paper is the final result ofour work and considers the conceptual and
technical features of the controversies
problem of the SMEs accounting standards.
A version of the present paper was
presented at 3
rd Audit and Accounting
Convergence – 2008 Annual Conference 30-31
st October, Babes-Bolyai University, Faculty
of Economic Sciences and Business
Administration, 2008. The authors express theirappreciation to some participants of the
conference, especially to Professor Alain
Burlaud and Professor Ricardo Lopes Cardoso.
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