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Small Businesses Not Moving So Quickly to IFRS Lite

October 6, 2009

Small companies in the U.S. are free to move to the International Accounting Standards Board’s stripped-down set of International Financial Reporting Standards for small and midsized enterprises, but few are doing so yet.

There’s good reason, according to an article on The IASB’s recently approved IFRS for SMEs will require a considerable amount of adjustment in several areas. Those include not only a change in mindset in going from rules-based to principles-based standards and a greater reliance on professional judgment, but maybe also in terms of changing a company's technology systems, third-party lending agreements, and revenue arrangements with customers.

Also, until the SEC approves the IFRS roadmap, few small and medium-sized privately held businesses are going to jump ahead of their public company counterparts in moving to a whole new set of accounting standards. At least, not until they get pressure from their lenders, suppliers, partners and outside accountants.

So while IFRS for SMEs may catch on in Europe, and it’s too soon to tell about that, don’t expect it to be widely adopted here in the U.S., even if its 230 pages are a lot faster reading than the 17,000 to 25,000 pages in U.S. GAAP.

Comments (1)
I have been thinking about the risks involved if the US does not switch to this system. While I think many investments from overseas will decrease, I do not think it will come to a halt as many places seem to portray.
Posted by vbpoutsourcing | Tuesday, October 06 2009 at 4:36PM ET
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