SME and large company finances should come under same laws: expert

Published : 10:50 am  October 8, 2015 | No comments so far |  | 


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genaw2By Chandeepa Wettasinghe
Small and medium enterprise (SME) finances should come under the same laws governing larger companies, the head of the global body for professional accountants told Mirror Business during a brief interview in Colombo.

“As far as the law is concerned, the income tax law, the company law, there is no difference. Compliance is mandatory. You need to do tax returns; you need to do company returns. You need to be audited,” ACCA Global President Datuk Alexandra Chin said, citing Malaysia as an example.

She noted that in most of the countries, there are no audit exemptions for any company.
“I think even in Sri Lanka, all the private limited companies need to be audited,” she stressed.
Over 90 percent of companies in Sri Lanka are SMEs. Many are sole proprietorships.

A recent World Bank study said that 96 percent of Sri Lankan SMEs are using registered auditors who help the SMEs evade taxes in return for a fee greater than the tax, due to lack of awareness among SMEs.

“Basically, for any businesses, I would still say, that it pays to go to a professional accountant. We’re trained. We have the competence. You may get away with what you’re doing, but eventually, the law will catch up with you,” Chin said.

She noted that in Malaysia, such practices had happened in the past, but have now faded away as the SMEs realized that having professionally audited accounts help businesses expand faster through easily obtained credit.

“Business people need to be more aware. They don’t know the difference between competent accountants compared to somebody who is an unlicensed accountant. Awareness has to come in,” she said.

She said that in Malaysia, the government takes the initiative in helping SMEs.
“This has made the government come in and subsidize the training for the accountants, so that the accountants can help SMEs. If there are new accounting practices coming in next year, the government subsidizes the training,” she added.

However, she said that the regulations within the laws could be differentiated to make lives easier for SMEs.
“As far as accounting standards go, IFRS (International Financial Regulation Standards) is for the big boys and we have a simpler set for SMEs. So it’s easier and less time-consuming,” she said.