SUPPORTING SMEs

In June 2022 AIA was accepted to membership of the European Federation of Accountants and Auditors for SMEs (EFAA).

An IFAC Network Partner, the EFAA is an umbrella organisation for 15 national accounting, auditing and tax advisor organisations that collectively have more than 380,000 individual members. These individual members are mainly SMPs that provide a range of professional services primarily to SMEs within the European Union and Europe as a whole. Formed in 1994, EFAA is a sectorial member of SMEunited and a founding member of the European Financial Reporting Advisory Group (EFRAG).

In July 2022 AIA was pleased to support the EFRAG-EFAA-SMEunited Joint Outreach on Draft EU Sustainability Reporting Standards (ESRS) Exposure Drafts and the speech made by Salvador Marin, President, EFAA.

In his speech, Marin said: “We welcome the Corporate Sustainability Reporting Directive’ s (CSRD's) embrace of SMEs. Sustainability is not just an indulgence of the large companies.

“Collectively SMEs account for the majority share of private sector sustainability impact. So, they cannot, they must not, be left behind or ignored. Accordingly, EFAA welcomes the CSRD and its intent. And we welcome, in principle at least, the development of ESRS.

EFAA outlined several key observations to consider, including capacity, pace of change, prioritisation, and proportionality.

Philip Turnbull, Chief Executive, AIA, added: “The standards are clearly necessary, but it is our duty to be realistic and find a balance between excellence and the practicalities required by companies and society.”

AIA subsequently responded to the European Commission’s proposals outlining the adoption of ESRS linked to the CSRD.

Many SMEs, and the SMPs supporting them through the provision of advisory, accounting and assurance services to them, stand to be impacted directly or indirectly, by the CSRD and EFRAG’ s ESRS. Our response is focused on the impact and implications for SMEs and SMPs. And our response is principle-based.

In submitting our response we collaborated with other members of the EFAA, with particular input from the Accounting, Assurance and EU Professional Regulation Expert Groups.

Working with other professional bodies through EFAA provides real leverage for members across Europe and beyond; together we are committed to supporting the role of SMPs and SMEs. In this consultation response we had real concerns that the proposed standards would create a disproportionate burden for SMEs and made recommendations for improvement whilst maintaining the core function of the sustainability reporting standard.

George Josephakis Council Member

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