Grant Thornton welcomes new global IFRS standard for privately held businesses
After recent amendments in Armenian legislation, since January 2009 and 2010 certain organizations are required to prepare their financial statements in accordance with IFRS, among which are the banks, insurance and credit organizations. Other organizations, to which the requirement does not apply, may choose to shift from local standards to IFRS voluntarily, press office of the Grant Thornton reports.
The new international financial reporting standard for small and medium-sized entities (IFRS for SMEs) could transform the way privately held businesses around the world prepare their accounts, said Grant Thornton, as it welcomed the publication of the global standard by the International Accounting Standards Board (IASB). The global accounting organisation believes the new standard offers a unique opportunity to create a standardised accounting framework for privately held businesses throughout the world.
IFRS for SMEs provides a substantially simplified set of internationally recognised accounting principles for privately held businesses. Based on the full IFRSs, which were developed primarily for listed companies, the new standard will particularly benefit businesses that operate internationally. Individual countries will now consider the new standard, consult with local stakeholders and decide whether and when it should be used in their jurisdiction. Individual countries will also have discretion over which entities the new standard will apply to.
Emil Vassilyan, Partner at Grant Thornton Amyot, explains, "Unlisted businesses around the world who currently have to comply with full IFRS will be pleased to find that the new standard is about one tenth of the length of full IFRS and that the number of potential disclosure items will be nearer to 300 than the current 3,000."
Grant Thornton believes the case for adopting IFRS for SMEs will require more detailed assessment in those countries where PHBs still use local accounting standards. In the EU, for example, there are currently around 55 different SME financial reporting systems.
Converting to new accounting principles always involves some degree of financial and resource cost. Businesses and their advisers will have to learn new terminology and accounting techniques and make changes to their accounting software. Despite these challenges, Grant Thornton believes the short term disruption will be outweighed by the longer term benefits for many PHBs around the world.
Alex MacBeath, global leader of privately held business services for Grant Thornton International explains, "The potential of this new standard is that we move to a situation where lenders and investors are able to assess company performance from financial statements that use directly comparable, authoritative, internationally recognised principles, regardless of the country of origin of the company itself. This could improve access to capital and help decision-making on cross-border deals, quite apart from reducing the administrative burden on PHBs."
The new international financial reporting standard for small and medium-sized entities (IFRS for SMEs) could transform the way privately held businesses around the world prepare their accounts, said Grant Thornton, as it welcomed the publication of the global standard by the International Accounting Standards Board (IASB). The global accounting organisation believes the new standard offers a unique opportunity to create a standardised accounting framework for privately held businesses throughout the world.
IFRS for SMEs provides a substantially simplified set of internationally recognised accounting principles for privately held businesses. Based on the full IFRSs, which were developed primarily for listed companies, the new standard will particularly benefit businesses that operate internationally. Individual countries will now consider the new standard, consult with local stakeholders and decide whether and when it should be used in their jurisdiction. Individual countries will also have discretion over which entities the new standard will apply to.
Emil Vassilyan, Partner at Grant Thornton Amyot, explains, "Unlisted businesses around the world who currently have to comply with full IFRS will be pleased to find that the new standard is about one tenth of the length of full IFRS and that the number of potential disclosure items will be nearer to 300 than the current 3,000."
Grant Thornton believes the case for adopting IFRS for SMEs will require more detailed assessment in those countries where PHBs still use local accounting standards. In the EU, for example, there are currently around 55 different SME financial reporting systems.
Converting to new accounting principles always involves some degree of financial and resource cost. Businesses and their advisers will have to learn new terminology and accounting techniques and make changes to their accounting software. Despite these challenges, Grant Thornton believes the short term disruption will be outweighed by the longer term benefits for many PHBs around the world.
Alex MacBeath, global leader of privately held business services for Grant Thornton International explains, "The potential of this new standard is that we move to a situation where lenders and investors are able to assess company performance from financial statements that use directly comparable, authoritative, internationally recognised principles, regardless of the country of origin of the company itself. This could improve access to capital and help decision-making on cross-border deals, quite apart from reducing the administrative burden on PHBs."
