Slightly more than half of small and midsized businesses prefer to have a separate set of accounting standards for private companies, according to a new survey by Deloitte.
Deloitte surveyed more than 220 financial professionals who work for private companies, approximately 77 percent of which are small and midsized companies with less than $1 billion in revenue. Fifty-one percent of the SMB respondents indicated they believe there should be separate accounting standards for public and private companies. Smaller companies with less than $100 million in revenue were more supportive of separate standards, with 55 percent believing there should be separate standards.
The survey follows on the heels of the International AccountingStandards Boards release of a stripped-down version of InternationalFinancial Reporting Standards, IFRS for SMEs, aimed at small andmidsized entities (see International Accounting Standards Issued for SMBs).
Deloitte believes interest in the separate standards could swell further if the new IFRS for SMEs standards received more attention. Forty-three percent of the SMB respondents answered no or dont know when they were asked about their awareness of the IASB project on IFRS for SMEs.
Approximately one-third (31 percent) of respondents from companies withrevenues from $500 million to $1 billion said they did not know whenthey would consider adopting IFRS for SMEs. Now that IFRS for SMEs is areality, that attitude could change.
Awareness of the new standards will probably have to grow before theycan take hold in the U.S., however. Some private companies are stillnot aware of the IASBs efforts in addressing the needs of privatecompanies, said Deloitte partner D.J. Gannon, who leads the firmsIFRS Center of Excellence. Private companies that adopt IFRS for SMEsstand to benefit from simplified reporting requirements, greatercomparability of performance for investors, lenders and other financialstatement users and a reduced burden of financial statementpreparation.
Since U.S. private companies may use IFRS for financial reporting(subject, for example, to the terms of their loan agreements or othercontractual requirements), the 230-page-long IFRS for SMEs may offer aviable option and be used instead of the approximately 17,000 pages ofU.S. GAAP in the new FASB Codification. Publicly traded companies arestill awaiting SEC approval of a proposed roadmap for transitioningfrom GAAP to IFRS that the previous SEC commissioner issued beforeleaving office.
The AICPAs Private CompanyFinancial Reporting Committee provided input on the IFRS for SMEs standards, andAICPA president and CEO Barry Melancon welcomed the introduction of thestandards earlier this month. Since the AICPA governing council votedto recognize the IASB last year as an official standard-setter, AICPAmembers have the option of using the new standards for privately heldcompanies.
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