The key objectives of the project were:
- to come up with views on how to improve the accounting systems of small enterprises so that they can provide the owners, managers and other stakeholders with appropriate financial information.
- not to add regulation or administrative burdens at EU or national level, which would be contrary to the aim of simplifying the business environment for small enterprises and reducing administrative burdens; therefore proposals to change the accounting legislation at EU level were beyond the scope of this project.
Good practices found:
- Double-entry book-keeping, because it offers a much better control of the transactions being recorded properly.
- Using simplified formats for financial statements i.e. where the balance sheet and the income statement present only the main headings.
- Preparing projected cash flow statements on a regular basis.
- Applying accrual basis accounting, because such an accounting method provides a more accurate and complete picture of the enterprise's financial position, performance and changes in its financial position than cash basis accounting.
- Applying the matching principle, because of the importance that revenues are matched with expenses to provide a truthful view of the enterprise's financial performance.
- Applying the true and fair view principle, because it is very important to ensure that accounting information is presented accurately and consistently.
- Using a standardised chart of accounts, because it removes some barriers when changing an accounting software package, but also because it facilitates the introduction of taxonomy to supply financial information.
- Applying the 'only once' principle meaning an administrative simplification in the supplying of financial information to different or the same authorities for different or the same purposes.
The full report of the project is below.