When Barnes Dennig Director Tom Groskopf and the rest of the IFRS for SME Implementation Group met last month in London, the debate was split over whether to expand the scope of International Financial Reporting Standards for Small- and Medium-Sized Entities (IFRS for SMEs).

It underscored a significant challenge in the ongoing efforts to establish a set of uniform, international standards: Accounting is more sophisticated in some markets than in others.

As it is currently constituted, IFRS for SMEs applies to private companies. In certain international markets, there is support for allowing public companies to use IFRS for SMEs, because it represents an improvement over their current standards, without being as complicated as full IFRS.

International Reporting RequirementsGroskopf opposes expanding the scope of IFRS for SMEs, because it will muddy what has been a clear distinction between private and public entities. The users of a private company’s financial statement generally have different priorities than users of a public company’s financial statement, so a financial statement under IFRS for SMEs is focused on cashflow, while a financial statement under full IFRS is focused on fair value.

“We in the U.S. have had this problem because we have U. S. GAAP that is for both private and public entities, and we constantly battle about cashflows and fair value,” Groskopf said during the SME Implementation Group meeting February 4-5 in London. “I’d hate to see that battle find its way into this.”

The International Accounting Standards Board plans to publish final revisions to IFRS for SMEs by early 2014, to go into effect in 2015. The IASB will publish an exposure draft of revisions in the coming months, based in part on the Implementation Group’s recent meeting in London.

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