An overwhelming number of small businesses support the introduction of special international financial reporting standards for SMEs that could help cut complexity and cost involved in preparing financial reports.
The survey of SME company directors, auditors, accounting firms and professional bodies by accounting firm Grant Thornton found 83% of respondents support the adoption of IFRS for small companies.
An international version of the IFRS for SMEs is expected to be released in July, with Australia’s accounting standards body expected to examine the standards soon after.
Under current laws, businesses over a certain size (they must satisfy two of these three conditions: $25 million in revenue, $12.5 million of assts or more than 50 staff) are required to report according to international financial reporting standards, which came into effect in 2005.
But Grant Thornton director Andrew Archer says the adoption of these standards has added a great deal of complexity to many companies’ reporting process.
“In practice, what that’s meant is that all companies that are filing their accounts with ASIC have been stuck with having to understand IFRS and the complexities of that.
“Our view would be that if an international standard comes out for SMEs, the preference would be to make that available sooner rather than later. There would be an immediate benefit there in that it would reduce complexity and cost.”
Archer argues international standards for SMEs would also make it easier for investors to compare companies in different jurisdictions.
While the adoption of such standards can typically take a number of years, Archer believes Australia should move quicker if the standards are suitable.
“We’d like to see it by the end of the year. If it’s there, why not have it there for people for use?”
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
