The standard setters need to listen to SMEs

Regulators should therefore beware of any extra burden placed upon them. One
body grappling with the issue is the
International Accounting
Standards Board
, which is about to launch a set of international standards
for SMEs.

This is no bad idea. That international companies should have comparable
accounts to make capital cheaper is a given, but many of the same arguments
apply to SMEs. It would make it easier for banks to move into overseas markets
to serve smaller businesses given that their accounting will be easier to

It’s only right and proper that SMEs should have a voice in discussions on
what is left in or out of the standards. Without that voice, it is difficult to
see how the project can have the mandate it needs. There are around 19 million
SMEs across Europe , and that means their concerns should be given full

They are the motor of the European economy. For standard setters that means
having people on board with on the ground experience to represent SME interests.

The IASB has good intentions but political representation would enhance and
potentially make the whole project more acceptable. This is important because,
despite fears, IFRS for SMEs is likely to remain voluntary, which means take up
of the standards could rely upon a proper reflection of SME concerns. But there
remains the possibility that funders themselves could demand accounts in IFRS as
a condition of any loan or investment. That would be validation for IFRS but
tremendously difficult for SMEs if the standards do not go some way to meet
their needs. One thing SMEs don’t need now is another obstacle to funding.

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