Small and medium-sized enterprises (SMEs) play a particularly important role in the Austrian economy, with commercial banks acting as their main sources of external finance. As SMEs are also very important in the REPARIS countries, analyzing how SMEs and their banks view the operation of financial reporting in Austria could produce some useful pointers for the design of financial reporting frameworks in the REPARIS countries.

In cooperation with the Austrian Federal Economic Chamber and the Austrian Institute for SME Research, the CFRR conducted two surveys in late 2012 collecting information on SMEs' experience with corporate financial reporting and on Austrian banks’ requirements for financial information from SMEs applying for credit. The surveys found that financial statements, both audited and unaudited, play a valued role for Austrian SMEs; not only for tax purposes, but also in helping SMEs to improve the financial management of their businesses. In addition, due to their important role in banks’ decisions whether to extend a loan, financial statements facilitated SMEs’ access to bank financing.

However, the potential benefits for Austrian SMEs from financial reporting very much depend on: (i) the system striking an appropriate balance between promoting improved financial information and reducing the regulatory burden on reporting firms; and (ii) the accounting and auditing profession’s ability to provide reasonable assurance regarding the data accuracy of the financial information provided in a SME credit application. In this respect, the surveys found that the Austrian audit profession has a generally good reputation for providing reasonable quality assurance for financial decision making among Austrian credit institutes.