Changes in Obligatory Financial Reporting of Small and Micro Companies in the European Union in the Opinion of Stakeholders

The financial report is the tool which is used to communicate financial position and efficiency of the entity to the wide range of users who make economic decisions based on this tool. It is expected that the information contained in the report is reliable, complete, understandable and useful, while prepared while maintaining the basic principles of economic calculation, ie. the benefit of its use will surpass the cost of its preparation. Reducing the administrative burden faced by the SME sector company is today one of the most important challenges, particularly in the economies of the ownership structure as in Poland, where this group of companies has more than 99% of the operating companies (being dominated by micro-enterprises - 96% - GUS data 2012.). The aim of the paper is to: 1) identify changes occurring in the form and extent of disclosures in the financial statements required of small and medium-sized entities operating in the EU countries, with particular emphasis on Poland; 2) identification of the opinion of Polish stakeholders about the changes incorporated lately into the accounting law. Objective methods used in the paper are:1) the review of accounting and reporting regulations in EU and in Poland, 2) the review of national and international literature on reporting of SMEs, 3) analysis of comments on the proposed changes in the Polish Accounting Act expressed by stakeholders, including by the Association of Accountants in Poland, the Financial Supervisory Commission, government bodies, the Central Statistical Office, and many others. Main conclusions will be drawn using scenario of deductive methods. Simplification in financial reporting is a way to reduce bureaucratic barriers and stimulate entrepreneurial companies, particularly micro-enterprise. However, the introduction of significant simplifications in the financial reporting raises concerns about the reliability of this primary channel of information on economic and financial situation of the economic entity which is the financial statements. The question remains as an opened about the proper scope of the disclosures required by the business. Will not limited information presented in the financial statements be too vague, for external and primarily external users? Therefore, does it not contribute to the deterioration of the position of small and micro enterprises in the case of applying for external sources of funding and, consequently, will not lead to an increase in the cost of capital for them?