A Game-Changer for Small-Business Accounting by ProQuest

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									                                                                                          FINANCIAL REPORTING
                                                                                                   By Bruce Pounder, CMA, CFM




     A Game-Changer
     for Small-Business
               Accounting
     The International Accounting
     Standards Board recently issued
     its long-awaited “International
     Financial Reporting Standard for                      the final name doesn’t fully convey     lack public accountability.
     Small and Medium-sized Entities.”                     the intricacies of the Standard’s          According to the IASB, “An
     The Standard is poised to be a                        entity scope. So who, exactly, is the   entity has public accountability if:
     “game-changer” for small-                             intended audience?                      (a) its debt or equity instruments
     business accounting in the                               The IFRS for SMEs is, like full      are traded in a public market or it
     United States and around the                          IFRS, a country-neutral set of          is in the process of issuing such
     world.                                                financial reporting standards.          instruments for trading in a public
                                                           Therefore, the IFRS for SMEs is         market…or (b) it holds assets in a
                                                           appropriate for smaller compa-          fiduciary capacity for a broad

     O     n July 9, 2009, the Interna-
           tional Accounting Standards
     Board (IASB) published the first
                                                           nies, regardless of which country
                                                           or countries they operate in.
                                                              In countries that impose statu-
                                                                                                   group of outsiders as one of its
                                                                                                   primary businesses. This is typi-
                                                                                                   cally the case for banks, credit
     “International Financial Reporting                    tory financial reporting obligations    unions, insurance companies,
     Standard for Small and Medium-                        on companies within the scope of        securities brokers/dealers, mutual
     sized Entities” (IFRS for SMEs).                      the IFRS for SMEs, a company’s          funds and investment banks.” This
     The IASB refers to the IFRS for                       use of the Standard in satisfying its   definition of public accountability
     SMEs as a standard (i.e., singular),                  statutory reporting obligations         effectively excludes most small
     but it’s really a complete set of                     would have to be allowed or             companies and therefore puts
     financial reporting standards that                    required by local legislative action.   those companies within the scope
     is intentionally much shorter and                     In contrast, in countries that don’t    of the IFRS for SMEs.
     simpler than full IFRS.                               impose such obligations on com-
        As its name implies, the IFRS                      panies within the scope of the          What the Standard Is For
     for SMEs is designed around the                       IFRS for SMEs (e.g., the U.S.),         The IFRS for SMEs applies to the
     financial reporting capabilities and                  companies can decide for them-          preparation of general purpose
     needs of smaller companies and                        selves whether and when they want       financial statements that are pub-
     their stakeholders. In this month’s           
								
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