I received an email late yesterday from the IASB with the following message:
The International Accounting Standards Board (IASB) issued today an International Financial Reporting Standard (IFRS) designed for use by small and medium-sized entities (SMEs), which are estimated to represent more than 95 per cent of all companies. The standard is a result of a five-year development process with extensive consultation of SMEs worldwide.
For non-public companies, the development of IFRS tailored to their needs is good news. (Get the IFRS for SMEs at the IASB website.) For Canadian non-public companies, move along – there’s nothing for you to see here.
The reason is because despite the full embrace in my country of IFRS for public companies (they’re making the transition as of Jan. 1, 2011), our governing body has decided that for private, we’re going to go it alone. All the good reasons to join the international community when it comes to accounting standards for public companies get thrown out the window when it comes to private. Apparently, Canadian private companies are a special beast that no one outside our borders can comprehend, and thus the job of maintaining a separate set of accounting standards is preserved.
The decision to develop a separate set of standards for Canadian private companies is the wrong one, and I hope it won’t be long before the powers that be see it as such. At the very least, the AcSB should allow private Canadian companies to use IFRS for SMEs. (Currently they have the option to implement IFRS when public companies do, but no word on the SME variant.)
What do you think?
I actually agree that it is the wrong way to go it alone with the Private GAAP option. It just doesn’t make sense when there is an actual international standard for SME available.
If it comes down to the cost of converting from GAAP to IFRS…we could say the same of converting Paper to Digital. In the end IFRS is for the long-term…and it would be so much easier to go public…instead of using GAAP for years and having to start from the beginning down the road when the company is ready to go public.
Yeah – if we’re likely to go with IFRS for SMEs at some point in the future (which I believe it is), why bother with the intermediate step?
So the Part II GAAP is the new and improved IFRS for private companies?
Yes.