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Moss-Adams: IFRS webinar on SME’s(Part2)

September 4th, 2009 Comments off

            Yesterday I covered the opening segment on my coverage of the Moss-Adams webinar on IFRS for SME’s. As a quick review, the overall definition of an SME, or Small Medium Enterprise is one that publishes financial statements for external customers, has no “Public Accountability” or fiduciary responsibility, and is a private entity. As the classification currently stands, there is no threshold on the level of revenues for the company; only that it is private in organizational structure. While some of the basic elements of general IFRS were covered, I’ll itemize some of the points that were covered on the call yesterday.

§  GAAP is a Rules-based set of guidelines whereas IFRS is a Principles-based structure.

§  LIFO is allowed under GAAP whereas it IS NOT allowed under IFRS.

§  GAAP calls for inventory valuations that are the lower of cost/market versus a lower of cost or Net Realizable Value under IFRS.

§  Unlike GAAP which DOES NOT allow for the amortization of goodwill, IFRS DOES ALLOW for this, along with the inclusion of a 1-step impairment test.

§  Unlike GAAP which does not allow for the reversal of impairments, IFRS DOES ALLOW for a reversal, except for in the case of goodwill.

§  Under GAAP, R&D expenses are capitalized if obtained through an acquisition and expensed if they are internally developed.

            With respect to the first rollout of IFRS for SME’s in the U.S., there would be a complete review after the first 2-year window to address any errors, omissions, or provide further clarity for specific topics. After the first 2-year review, this process would then happen every 3-years.  Also during the webinar there were a number of questions that were posed to the participants. As I mentioned in my posting yesterday, there were 245 participants on the webinar. Below are the questions & responses.

Do you believe your organization would benefit from IFRS for SME’s?
Yes 14%      
No 14%      
Not Sure 34%      
N/A MA employee 36%      
           
Do you believe your company will adopt within the following timeframes?
Immediately 0%      
1-3 years 19%      
3-5 years 34%      
Never 8%      
N/A MA employee 37%      
           
How much do you know about IFRS for SME’s?
Nothing 18%      
Very Little 50%      
Significant 6%      
N/A MA employee   24%      

            As I’ve mentioned in previous posts, I still have my doubts as to how aggressively this will really be rolled out in the U.S. and if the U.S. will allow GAAP to be so easily discarded in favor of such a new set of standards, regardless if they are being applied globally. We shall see….

Thanks for reading . . . . 

Jeffrey Ishmael