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Moss-Adams: IFRS webinar on SME’s(Part I)

September 3rd, 2009

             Although I do tend to be a critical of the IFRS outlook, I do continue staying up to date on all that is happening. Yesterday I sat in on a Moss-Adams webinar on “IFRS for SME’s & Private Companies”, which focuses on Small & Medium Enterprises. I do tend to pay a bit more attention to what Moss-Adams is doing since they have had extended involvement on the IFRS front, and it was this same firm, along with Mazars, that we used in our IFRS conversion in 2005.  They’re a professional outfit and their guidance was great. While a good majority of the webinar was more on the educational side of IFRS versus GAAP, it was probably appropriate to the audience, where in one of the survey questions, 68% knew “Nothing” or  “Very Little” about IFRS. I was also surprised by the number of participants in the session, which was 245. Although I later learned in some of the survey questions that there were also a large number of Moss-Adams employees on the call.

            Starting off the webinar was the opening survey question, which asked “How much do you know about IFRS for SME’s?”  Of the participants, 18% knew “Nothing”, 50% knew “Very Little”, 6% were “Significant”, while 24% were N/A due to their status as a MA employee. The call progressed into discussing the merits of implementing IFRS for the SME. One of the more significant stats was the fact that the guidelines of IFRS for SME’s is only a scant 230 pages, while the full-IFRS version is 2,700 pages, which pales in comparison to U.S. GAAP, which is a ghastly 17,000+ pages.  What the folks at MA have been finding, which is no surprise, is that many SME’s are finding a full implementation of IFRS too complex and costly to adopt. But what exactly is the definition of an SME? As IFRS policymakers define an SME;

§  Publishing of financial statements for external use.

§  No “public accountability”, whether in the public markets or a fiduciary responsibility.

§  Private entity

§  No threshold on company size.

            I was somewhat surprised by the last point in which there is no threshold for how big the company can be in the adoption of this set of standards.  As it was also discussed, IFRS for SME’s has already been approved and is allowed for current adoption by companies in the U.S.  This has me wondering what the response would be from my banker if I handed him a set of financials and advised him that I was reporting in this new format? While Moss, Deloitte, and the remaining large firms are starting to bolster their ranks with IFRS-centric staff, they are the exception. This is an area that will need to be increased in the coming years.  There was same great detail on the call and I’ll further expand on the call tomorrow.

 

Thanks for reading . . . .

 

Jeffrey Ishmael

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