Is IFRS for SMEs a Beneficial Alternative for Private Companies?

The IASB's Comprehensive Review

Joseph C. Sanders, PhD, CPA, and Deborah L. Lindberg, DBA, CPA, and Deborah L. Seifert, PhD, CPA

While the United States has struggled for decades to decide how to best account for private companies, the IASB has made great strides in recent years by developing International Financial Reporting Standards for Small and Medium-sized Entities (IFRS for SMEs), which is tailored to private companies that publish general-purpose financial statements for use by lenders, creditors, rating agencies, and others. Issued by the IASB in July 2009, IFRS for SMEs has experienced tremendous acceptance since its release. The standards are now being used in more than 80 countries (Exhibit 1) and have been translated into 24 languages. Furthermore, IFRS for SMEs spans just 230 pages, compared to more than 3,700 pages for full IFRS and approximately 15,000 pages for the full codification of U.S. GAAP.