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EU rejects IFRS for SMEs

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17th Sep 2007
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The European Union’s commissioner for internal markets, Charlie McCreevy, has officially rejected the proposed IFRS standards for SMEs on the grounds they are too complicated. Rob Lewis reports

The standards proposed by the International Accounting Standards Board (IASB) represent a simplification of those required for listed companies. The SME standard runs to 260 pages, compared to the 1733 page equivalent for businesses that have gone public. However, Commissioner McCreevy made clear in March his feeling that the regulatory burden in the EU was already excessive. Last week he announced he was not going to endorse the standard “at this stage.”

“The feedback we have received from member states, the European parliament and stakeholders is that the current IASB draft is not simple enough to be applicable for the bulk of SMEs in the EU,” the Commissioner continued.

The news will come as a setback to the IASB’s campaign for unified global accounting standards, even if the proposed standard was non-mandatory. The rejection also appears to have disappointed the ACCA, which held a conference on the matter last week.

“Our event was represented by many key stakeholders and it was agreed that while the IASB still needed to address certain issues concerning scope and applicability relating to the class of entity, on the whole it had done a pretty good job,” said Richard Aitken-Davies, ACCA deputy president and conference chair.

Specific complaints about the standard include concerns about the amount of cross-referencing to the full IFRS regime, which defeats the purpose of a simplified standard for SMEs.

While IFRS for SMEs has attracted mixed responses in Europe, the Asian markets are reported to be strong supporters. Their emerging markets and limited accounting traditions may make them the biggest beneficiaries of such a standard.

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