With effect from 1 January 1999 the changeover to a single European currency will gradually take place. Although the final changeover will not occur until 1 January 2002, and euro notes and coins will only be available from that date, most enterprises will already be confronted with the euro from 1 January 1999 onwards, as by that date, it will be possible to make voluntary payments in euro and euro bank accounts will exist. Under euro Regulations, banks will be required to handle conversions between the euro and the national currency unit during the transitional period. It is therefore necessary to prepare on a timely basis for the euro. Enterprises in all countries should begin preparations, and not only those in first wave countries. Second wave accessions could occur not long after the launch of EMU on 1 January 1999. Therefore E-day could be very close or identical for the first and second wave countries.
In principle the situation for SMEs will not differ from that of larger enterprises as the same considerable changes will need to be made to prepare for the euro. But the cost of the changeover as a percentage of turnover will, as a rule, be much greater than for larger enterprises. SMEs usually have limited managerial resources to spare because of day-to-day pressures whereas larger enterprises might have in-house teams. Therefore less time will be available in particular for education and training on the euro. Furthermore, while an enterprise might be large overall, an individual unit or division in question might be quite small and could therefore experience the same problems as SMEs in the changeover to the euro.
Special efforts need therefore to be made to give SMEs adequate notice of the changes which will be required and to ensure that appropriate assistance is available to help them with the transition as they may be slower to take action than larger enterprises. SMEs may need to be convinced that proper preparation is necessary and in their interests. The auditor/accountant of the SME will need to provide advice and to check whether the enterprise is making adequate preparations for the introduction of the euro as part of the audit. He may need to report on any areas not covered sufficiently in his management letter. It is necessary that SMEs start making plans as soon as possible for the changeover to the euro. This includes collecting information especially on customer attitudes; identifying areas which will require changes; timing and budgeting the changeover and implementing the necessary changes. This checklist aims to provide assistance in the planning and implementation of the changeover process.
This checklist consists of five parts:
Management and Strategic Issues
Domestic Enterprises in Inner Countries (with no involvement in foreign currency transactions)
Enterprises in Inner Countries (participating in EMU)
Enterprises in Pre-Inner Countries (not participating in first wave of EMU)
It is envisaged that all enterprises regardless of whether they are located in inner or pre-inner countries should review and use part I of the checklist on management and strategic issues as well as Part II. Part II summarises the more detailed checklists in Parts III, IV and V by setting out a list of the key trigger points. This list could also be used by auditors during the audit of financial statements and could possibly help to highlight issues to be included in the management letter. Part III is designed for those enterprises in inner countries that are purely domestic, that is to say without any involvement in foreign currency transactions. Part IV addresses the details of the changeover to the euro for those enterprises (either parent enterprises or subsidiaries) based in countries that participate in the first wave or second wave of EMU. Part V contains issues for those enterprises in countries not involved in EMU which will encounter the euro in their foreign currency transactions. The table below indicates which part of the questionnaire (III, IV or V) enterprises should use.