The IASB has issued a two page plus new accounting standard for small and medium sized enterprises. As Accountancy says:
The international standard-setter has today published its long-awaited International Financial Reporting Standard for SMEs after five years of consultation on the standards.
The International Accounting Standards Board aimed to produce a standard which is less complex than full IFRS and which would improve comparability for SME users of accounts, who comprise 95% of businesses.
Commenting on the standard, IASB chairman Sir David Tweedie said: ‘For the first time, SMEs will have a common high quality and internationally respected set of accounting requirements. We believe the benefits will be felt in both developed and emerging economies.’
That is ludicrous. These things are too complex for developed economies — in developing and emerging economies they would represent madness — and add no value at all to users or tax authorities. These countries should adopt the UN’s SMEGA — Accounting and Financial Reporting Guidelines for Small and Medium-sized Enterprises. These make vastly more sense — and are short, comprehensible, sensible and appropriate.
Just about the opposite of the IASB offering.
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I think the IASB must be bored. What possible reason do they think that any company have for adopting the IFRS SME?
-If you are owned by a company that reports under IFRS it makes sense to follow full international GAAP to avoid reconciliations.
-The taxation law of most countries is tied to their national GAAP so this just makes tax compliance a total nightmare.
-Transition rules will be costly and benefit nobody accept the accountant paid to do it.
-Most small firms are audited by small to medium size accountants who’s partners will be largely ignorant of IFRS.
-Fair value adjustments will make the income of companies volatile. What is the need for the net assets to track reality for an owner-manager, when he (or she) is profit centric?
-Finally (and most importantly) who cares if SME companies’ accounts are internationally comparable?
What a load of crap.
P.s. If this ever gets adopted in the UK, I cant wait to see the first taxi driver or brick layer who has to do disclosure on Financial Instrument risk and Credit risk etcetera. Brilliant.
Have you noticed that IASB is an anagram of “bias” 😆 ?
Is it true that IFRS 8 is a shame?
I am an accountant and planning to apply IFRS 8 for the first time. I found this article below very informative in terms of the negatives of ifrs 8. But it true that it makes the accounting disclosures more complicated and meaningless.
http://hubpages.com/hub/IFRS-8-Operating…
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