Small companies show preference for separate accounting standards

Support for separate accounting standards for public and private companies is growing among small and mid-sized companies, according to a new report from Deloitte.

Following the International Accounting Standards Board’s (IASB) release of the International Financial Reporting Standards for Small and Medium-Sized Entities (IFRS for SMEs), Deloitte expects support to continue to increase. One significant obstacle, however, is awareness of the new standards.

“Some private companies are still not aware of the IASB’s efforts in addressing the needs of private companies,” said D.J. Gannon, partner, Deloitte & Touche LLP and leader of Deloitte’s IFRS Center of Excellence. “Private companies that adopt IFRS for SMEs stand to benefit from simplified reporting requirements, greater comparability of performance for investors, lenders and other financial statement users and a reduced burden of financial statement preparation.”

Forty-three percent of respondents selected “no” or “don’t know” when asked about awareness of the IASB project on IFRS for SMEs. Since many U.S. private companies may use IFRS for financial reporting, IFRS for SMEs may present another viable option to U.S. GAAP.

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