IASB releases accounting standard for SMEs

The long awaited accounting standards for small and medium sized businesses (SMEs) have been released with the potential to change the way 95% of companies across the globe conduct business.

The five-year project by the International Accounting Standard Board (IASB) aims to create a common accounting language for the world's SMEs.

In the standards the IASB has tried to address concerns the rules would be overly complex, describing the 230-page document as a self contained standard which 'is tailored for the needs and capabilities of smaller businesses'.

'Many of the principles in full [reporting standards for large companies] for recognising and measuring assets, liabilities, income and expenses have been simplified, topics not relevant to SMEs have been omitted, and the number of required disclosures has been significantly reduced,' the IASB said in a statement.

It is now up to individual countries to decide whethern they will adopt the standards.

Demand for the document has come predominately from emerging and developing economies in need of high quality accounting rules, but without the expertise or resources to produce them.

The US is also said to be keen on adopting the standards, however, Europe has so far expressed reluctance, citing mixed and negative reactions to a draft in 2007.

The standard was the result of extensive consultation since 2004. They have been field-tested by 100 small companies in 20 countries, which according to the IASB, resulted in a number of 'simplifications'.

IASB Chairman Sir David Tweedie described today's publication as a, 'major breakthrough' for companies across the world'.

'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,' he said.