IASB Prepares to Work on Private Company

Accounting and Reporting

Last September, Financial Executive International's (FEI) Committee on Private Companies (CPC) responded to the International Accounting Standards Board's (IASB) request for comments about proposed reporting standards for small and medium-sized entities (SMEs).

CPC provided comments on this important issue to IASB last year. Click here to access the full letter.

After the period of public comment and deliberation late last fall, on Feb. 15, 2005 the IASB "agreed to drop the designation 'small-and medium-sized enterprises' in framing the upcoming standards. Instead, the standards will be tailored to 'non-publicly accountable entities.' " The announcement came after the IASB staff noted in a paper that the term SME is very general and could be used to mean very small companies.

IASB hopes there will be accounting standards for small and medium-sized enterprises (SMEs) by 2007. The board members initially approved a staff plan that broadens the membership of the IASB advisory group on private companies so that users of private companies' financial statements have stronger input.

The new group plans to have its first meeting on February 28. It also plans to have an exposure draft in March of 2006, after which 120 days will be permitted for comment. Following a final round of discussions after responses to the draft have been gathered, the board plans on adopting a final standard in 2007 and having the standard become effective Jan. 1, 2008.

To read the full article, see the Bureau of National Affairs Inc. (BNA) article "IASB Laying Groundwork on Standards for Small-, Medium-Sized Enterprises" published on February 16. Also see the IASB Web site at www.iasb.org.

Prepared Feb. 22. 2005, by Serena Davila, FEI Director, Private Companies, at sdavila@fei.org, 202.626.7801.