New standards too big for small companies

The International
Accounting Standards
has issued exposure drafts for the new standards, but the
Association of Chartered
Certified Accountants
(ACCA) said this week that the rules will still be too
complex for most small companies.

‘In some countries, the exposure draft is viewed as too complex and therefore
only likely to be suitable for a relatively narrow band of larger, non-publicly
accountable entities and not to genuinely small and medium-sized entities,’ the
body said in its response to the consultation, which closes on Friday.

‘Other countries, especially the many that currently rely on IFRS as the
basis of reporting by all companies of whatever size, are likely to make use of
the standard, but it will represent a lost opportunity to reduce the burdens of
reporting for the bulk of SMEs unless it is further simplified,’ it added.

ACCA said that the
IASB, in drafting
rules for companies with 50 employees or more, had not grasped that most SMEs
are not even that size.

ACCA suggested that it should be renamed, otherwise many would be confused
into thinking it applied to all companies below the large company level. ACCA
said the current standard could have undesirable effects. ‘A standard in its
existing form may trigger development of other forms of reporting,’ it said.

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Fiona Westwood of Smith and Williamson.