IFRS Light

While the SEC contemplates use of International Financial Reporting Standards (IFRS) for public companies, a new Deloitte poll suggests that a significant number of private companies have interest in having a single set of globally accepted financial reporting standards.

More than 40 percent of 1,700 finance professionals, mostly from private companies, responded to a set of polling questions during a Deloitte webcast by stating that their companies would take positive action when the International Accounting Standards Board (IASB) completed its project on private entity reporting (“IFRS Light”). Almost 14 percent said they would consider adopting the IASB's new standard in the near-term, while 26 percent reported they would assess the costs and benefits of adoption.

The IFRS Light project, expected to be completed later this year, is expected to be a simplified, roughly 250-page tailored version of full IFRS. While approximately 12,000 public companies await the SEC's final decision on adopting IFRS, there are even more private companies in the U.S. that could look to adopt either full IFRS or the IASB standards for private entities.

Nearly 85 percent of those polled found something appealing about the project, including more than 33 percent that liked the idea of having a simplified, self-contained set of accounting standards that are appropriate for private entities. Close to 30 percent believed these standards would reduce their financial reporting burden, and just over 21 percent cited better comparability for users of private company financial information.

The IASB's project on private entity reporting could go a long way toward addressing many small business needs by providing an easier, more user-friendly set of standards that have the potential to help companies reduce costs, while at the same time provide better information and more transparency to users of private company financial information.