Global adoption of SME standards imminent

News Article - 01 February 2010
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At least thirty-five countries have pledged support for the adoption of international financial reporting standards (IFRS) for small and medium sized enterprises. The nations, many of whom come from developing or emerging economies, will either require or permit use of the global standards within three years.

The news has put pressure on developed countries, some of whom have not made their position on the IFRS clear. Both the United Kingdom and the United States support the move; the UK will require the rules whilst the United States will permit them.

The support was revealed in a poll conducted by the International Accounting Standards Board (IASB). In July 2009, the Board released a 230 page booklet focused on producing a globally consistent set of accounting standards for SMEs. The booklet targeted 99% of the world’s unlisted corporations.

Along with the broad support from nation states, the World Bank has publicly supported the booklet and its aims, arguing the introduction of global standards would increase the capital flowing to emerging economies. In addition, investors would be better able to understand the relative value of an enterprise in accordance with its geographic location.

Whilst there is broad global support for the IFRS, some regions have protested their introduction, arguing it will damage their economies. Tax collection in France and Germany, for example, is dependent on accounting standards. Much of the resistance in Europe has been put down to France and Germany’s position. However, with such strong global support, it is likely the EU will adopt the accounting standards over the next three years.

Small and medium sized enterprises may be concerned how the new rules will affect operations. With accounting standards playing such a large role in day-to-day running, businesses must ensure their infrastructure is robust enough to absorb changes such as the introduction of global accounting standards.

Access business accounting software offers a solid accounting solution that is regularly updated to ensure customers comply with the latest legislative requirements. For more information, contact Access on 0845 345 3300.

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