Insights

We have been hearing about the U.S. adopting the International Financial Reporting Standards (IFRS) for quite some time now. At the G-20 Summit held in Pittsburgh in September, trustees of the G-20 reconfirmed their support of projects outlined in the Memorandum of Understanding, which calls for the Financial Accounting Standards Board to complete convergence with IFRS by 2011.

In an effort to ease the burden on countries converging to IRFS, the International Standards Board (IASB) issued IFRS for small and medium-sized entities (SMEs) in July 2009. The IFRS for SMEs is a self-contained standard of fewer than 230 pages (the full IFRS is 2,500 pages, U.S. GAAP is roughly 10 times larger than the full IFRS), designed to meet the needs of small and medium-sized entities. The IASB estimates that SMEs account for over 95% of all companies around the world.

When comparing the IFRS for SMEs to the full IFRS, the IFRS for SMEs is less complex in several ways, including significantly fewer disclosures (roughly 300 versus 3,000), the omission of topics not relevant to SMEs, and while the full IFRS allows accounting policy choices, the IFRS for SMEs allows only the easier option.

To further reduce the burden of SMEs, revisions to the IFRS will be limited to once every three years. Some experts have stated that U.S. private companies may find IFRS for SMEs more relevant and less costly than U.S. Generally Accepted Accounting Principles.

Please visit our IFRS Resource Center for additional information.

Schneider Downs provides accounting, tax and business advisory services through innovative thought leaders who deliver the expertise to meet the individual needs of each client. Our offices are located in Pittsburgh, PA, and Columbus, OH.

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