RSS feedsRegulators should therefore beware of any extra burden placed upon them. One body grappling with the issue is the International Accounting Standards Board, which is about to launch a set of international standards for SMEs.
This is no bad idea. That international companies should have comparable accounts to make capital cheaper is a given, but many of the same arguments apply to SMEs. It would make it easier for banks to move into overseas markets to serve smaller businesses given that their accounting will be easier to understand.
It’s only right and proper that SMEs should have a voice in discussions on what is left in or out of the standards. Without that voice, it is difficult to see how the project can have the mandate it needs. There are around 19 million SMEs across Europe , and that means their concerns should be given full consideration.
They are the motor of the European economy. For standard setters that means having people on board with on the ground experience to represent SME interests.
The IASB has good intentions but political representation would enhance and potentially make the whole project more acceptable. This is important because, despite fears, IFRS for SMEs is likely to remain voluntary, which means take up of the standards could rely upon a proper reflection of SME concerns. But there remains the possibility that funders themselves could demand accounts in IFRS as a condition of any loan or investment. That would be validation for IFRS but tremendously difficult for SMEs if the standards do not go some way to meet their needs. One thing SMEs don’t need now is another obstacle to funding.
