IFRS Accounting Standards for Private Companies
Many have long thought that public companies would drive adoption of the International Financial Reporting Standards (IFRS), the international counterpart to U.S. Generally Accepted Accounting Principles (GAAP). However, with progress toward the SEC’s much publicized proposed roadmap to the adoption of IFRS accounting standards slowed, the continued push toward the adoption of IFRS has received support from an unusual source – private companies.
The IFRS standard-setting body is close to finalizing new guidance that will provide a simplified version of IFRS specifically designed to meet the unique needs of private companies. The standard will simplify many of the most complex areas of accounting, including goodwill, fair value, pensions, and others, and also calls for a reduced set of financial statement disclosures.
Many companies have been calling for a similar set of simplified standards for private companies in the US (the big GAAP vs. little GAAP debate), but only modest progress has been made to date. Perhaps IFRS accounting standards will be the answer that private companies have been looking for.