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October 28 - November 3, 2015


The European Union, a reality and an opportunity for French chartered accountants and their clients By Stefan Petrovski Over time and through its evolution the European Union has increasingly become the new area for the development of French chartered accountants’ activities. It affects and alters their professional lives as well as that of their firms and more generally how the profession of chartered accountant functions in France and in other European Member States. How do we understand the evolution of a regulated profession following the establishment of European directives impacting it? How do we best advantage and accompany our clients in this new economic area? The construction of the European project has been long and winding, born long before the middle of the 20th century but which only actually materialized after the World War II. The influence of the European Union, with its motto “United in Diversity”, has never been so influential on our professional or personal life, than since introduction and adoption of the Euro currency on 1 January 2002. The European Union (EU) is the first economic power in the world, ahead of the United States, China and Japan, with a 2014 GDP of 13 900 billion constant Euros. Five European member states (Germany, United Kingdom, France, Italy and Spain) are responsible for 71.4% of the EU’s GDP. Despite this, the European Union is in the midst of an internal crisis marked by a rise of Euroscepticism during the 2014 European election campaigns where the EU often

served as a scapegoat for this crisis. The implementation of the “Services”, “Recognition of professional qualifications”, “Accounting” EU Directives and their transpositions into French law, have altered the regulatory landscape of French chartered accountants. Should this be a source of concern or of opportunity? Chartered accountants have chosen. The impacts of EU legislation are negative and positive for Chartered accountants. On one hand, they may feel competition from other European chartered accountants following the recognition of European diplomas and the opening of their firms to outside capital funding. This competition can cause a decrease in the rates of services provided to clients and an increased concentration of firms at the expense of smaller firms. However at the same time, with this new European market, they may develop their activities, leave the country, increase their professional mobility and become more intellectually and culturally diverse, and notably be able to develop EU wide based firms or networks. This European opening allows the profession to diversify in order to better adapt to the globalized economy of the 21st century. Small and medium-sized companies constitute the majority of Chartered accountant’s clients in the 28 EU member states. In 2013, the majority, 99.8%, of the companies were in the non-finance sector of the market economy, representing 21.6 mln companies. They employed 66.8% of European employees, i.e. 88.8 mln people and contributed to 58.1% of value added at factor cost, or 3 666

bln Euros (28% of EU GDP). To offer the best assistance and services to clients in the EU, some adaptations are necessary and desirable, among them: strengthening or learning other European languages and having a computer and digital ecosystem that resembles that of the clients and their markets. In fact, digital technology has abolished European borders and distances. Now is the time to seize this opportunity! The combination of effective and inexpensive communication systems and easy air and train transportation, make affluent and good European markets more and more accessible to professionals. Thus, the major and “only” obstacles seeming to block Chartered accountants from servicing SMEs in the EU are: social law, tax law, national languages and psychological barriers which are all surmountable as long as accounting professionals are motivated, have confidence in their ability to open up to others, and view the European Union as our common living space and national territory. Once these barriers are overcome, everything becomes simple and possible: Let’s go! And thus, a French company that sells in Germany will no longer be “exporting” but simply trading. But one last question arises: How can we conceive of serving a client in the European Union, a Union which actually puts into question its very founding principles? Stefan Petrovski is a French Chartered Accountant (Expertise-Comptable)

Remote working and business Momentum is growing for better public sector apps growing hand-in-hand With a growing number of professionals working outside the main office, at least some of the time, use of remote working tools has also radically increased. In fact, a staggering 86% of workers have used at least one tool enabling remote working in the previous month, according to a survey of over 44,000 senior business people across more than 100 countries by global workplace provider Regus. Some 85% of respondents also highlight that the needs of remote workers are strongly driving take up of ‘cloud’ applications that provide them with cost-effective access to office tools wherever they are. But online tools are also helping to ease some of the other pain traditionally associated with remote working especially through the proliferation of efficient and secure document sharing services. The research shows that Dropbox is the most commonly used online file-sharing service, used by 56% globally, followed by Google Drive 43% and TeamViewer 25%. Another challenge remote workers face is that of getting overlooked when they are not in the office. Instant Messaging tools and VoIP, however, are revolutionising the way workers communicate and helping remote workers show they are available, connected and immediately responsive. The research found that the most popular VoIP Messaging

application is Skype, used by 60% of global respondents in the previous month; Facebook Messenger 48% and Viber 13% followed. “With more businesses offering staff the opportunity to work remotely at least

occasionally, online tools are helping to overcome some of the hurdles traditionally associated with working from outside of the office,” explained Katerina Manou, Regus Regional General Manager – Balkans and Cyprus. “From feeling out of touch with colleagues, to being unable to access documents on the company server, technology is bridging the gap. The growth in instant messaging applications and document-sharing services in particular is playing an enormous role in helping more people to work flexibly, by enabling more reliable and secure ways of communicating with colleagues and sharing files, from wherever people may be working. This means that they can be fully operative even when they are not in the office.”

accounting, says PwC survey Governments around the world are increasingly taking steps to improve their accounting and achieve greater transparency and better public finance management - amidst growing recognition that the accounting framework traditionally used by the public sector isn’t fit for the 21st century, according to a PwC survey conducted in 120 countries. “It is important that governments which regulate accounting in the private sector – lead by example and have a high standard in their accounting system. This is not the situation today, but we see great interest in seeking improvement,” said Jean-Louis Rouvet, PwC Global Public Finance and Accounting leader. Accrual accounting principles reflect the long-term economic impact of political decisions in the financial statements. This results in a comprehensive view of a government’s assets and liabilities, and of its financial performance and cash flows. Some seven in ten governments intend to use accrual accounting in five years’ time, with IPSAS (International Public Sector Accounting Standards) being often taken as a reference point, the survey found. “There is now growing recognition of the importance of appropriate accounting and financial management in the public sector as a key means of achieving sustainable public finances. Governments need to step up and adopt sound and transparent accounting and reporting rules, as part of the democratic accountability process and the wider public finance management,” added Patrice Schumesch, PwC Global Public Finance and Accounting Partner. While in Europe, the European Commission is progressing with its plan to

adopt harmonised accrual accounting standards for all EU member states, the research shows that the biggest shift to accrual accounting is expected in Africa and Latin America, followed by Asia. Among the non-OECD countries surveyed, 50% plan to transition to accrual accounting in the next five years. “Transitioning to accrual accounting is not an end in itself, it is an enabler. Adoption of high-quality accrual accounting also lays the basis for developing better management information systems, which should also contribute to better decision making and a better use of public money,” Jean-Louis Rouvet added. “Performance management should help governments to measure the achievement of their service delivery objectives and in so doing add value for citizens. The end goal is to deliver a better public service and to achieve sustainable public finances, therefore creating a positive legacy for the next generation.” The governments surveyed also indicated their priorities for the next five years include one or several of the following projects, depending on their position along the government finance maturity spectrum: accrual accounting (based on IPSAS or similar standards) implementation, modernisation and greater integration of IT systems, capacity building and improvement of management information systems. The report ‘Towards a new era in government accounting and reporting’ (2nd edition) is available to download at t-public-services/public-sector-researchcentre/publications/second-edition-globalsurvey-government.html

Financial Mirror 2015 10 28  

Cyprus crediworthiness restored - issued 3rd bond for EUR 1 bln; NPLs remain a priority, says Bruegel conference; Fitch hikes ratings 2 notc...

Financial Mirror 2015 10 28  

Cyprus crediworthiness restored - issued 3rd bond for EUR 1 bln; NPLs remain a priority, says Bruegel conference; Fitch hikes ratings 2 notc...