With the proposal for a European Directive 2021/0104, the number of entities who will be required to prepare a non-financial statement (NFS) has been broadened. The directive provides that small and medium-sized enterprises (SMEs) may also voluntarily opt for drawing up a non-financial statement. It is therefore important to identify reporting standards containing key performance indicators (KPIs), tailored to the characteristics and structure of SMEs. In addition to the potential advantages in terms of improvement in relationships with stakeholders, NFI could be relevant for an early diagnosis of crisis signals therefore, an early warning behavior. This paper, therefore, aims to analyze how non-financial information can be a valuable aid to all governance players in identifying those first signs of crisis. In Italy, Organismo Italiano Business Reporting (OIBR) is drafting a document that promotes the use and communication of non-financial information on the part of SMEs with the dual objective of demonstrating that corporate governance structure on the one hand, and management and accounting tools on the other should be adequately designed and functioning so as to prevent a company’s exposure to the risk of failing to operate as a going concern.
Family Small and Medium-sized Enterprises (Family SMEs) in Italy have been asked by the new Insolvency and Crisis Code (IC-Code) to establish organizational, management and accounting bodies and tools appropriate to their nature and size. They need to be able to face early warning of company’s crisis and potential loss of going concern and to be able to implement strategies provided by the law to recover viability. The peculiarity of the Italian System is the joint existence of two levels of controls. A “downstream” one carried out by Auditors in charge of the accounting control and an “upstream” one carried out by the Supervisory Board in charge for the surveillance of directors’ behaviour. The board of statutory auditors (Collegio Sindacale), which has been defined as the watchdog distinguishing Italian corporate governance system, plays a fundamental role in reaching the goal. Its supervisory activities are played ex-ante over directors and are set with independence and competence. Auditors, instead, operate when everything has already been decided or even implemented concentrating on the accounting issues. The IC-Code sets up new corporate governance rules for a huge number of Family SMEs requiring the appointment of independent control bodies, Board of Statutory Auditors and Auditors and demanding therefore for more attention to risk monitoring and managing.
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