SME standard could ruin convergence

The inappropriate development of accounting standards for smaller unlisted
companies could cripple the drive towards global convergence, accountants have
warned.

The International Federation of Accountants has warned that the project to
develop a common global standard for SMEs, based on the principles of IFRS,
risks alienating countries with rapidly growing economies and large numbers of
small but expanding companies.

‘Concerns over the high costs of complying with full international financial
reporting standards have prompted many countries to look at alternatives to
international standards, or to delegate standards setting to organisations that
may not be appropriate for such a role,’ said IFAC chief executive Ian Bell.

‘Such actions are not in the public interest and therefore it is critical
that standard setters be conscious of the effects of compliance costs on small
and medium entities.’

Global convergence would be severely harmed if countries such as India or
China, that are considering IFRS adoption or are in the process, were to pull
out over burdensome compliance costs for SMEs.