Rules on accounting and audit are no longer seen universally as a necessary measure for protecting the interests of shareholders and creditors in small limited companies, but still amount to an important element of the wider framework of stakeholder safeguards.
This finding comes from a new report by ACCA – Protecting Stakeholder Interests in SME companies – A Comparative Review of the Role of Accounting Information. The report compares and contrasts the approaches taken by four different jurisdictions – the UK, the USA, Australia and Singapore – to the regulation of small limited companies.
The report confirms that the trend to deregulate the affairs of SMEs, which account for the great majority of businesses in all countries and which employ two-thirds of the global private sector workforce, has spread worldwide. Accounting and audit rules have been prominent among the obligations subjected by national authorities to cost-benefit analysis.
The report points out that in Singapore, for example, the directors of a company that pays out dividends to its shareholders in excess of the allowable level are liable to repay the excess to their company, and in Australia unpaid or overdue taxes can be recovered against a company’s directors personally. In the US, the separate legal personality of the limited liability company is frequently overruled, especially in insolvency, with the result that proprietors often lose the protection of limited liability and assume full responsibility for their company’s debts.