EU should allow Member States to decide on IFRS for SMEs says Grant Thornton

15 March 2010
Grant Thornton, one of the world's largest accounting organizations, believes that IFRS for SMEs could benefit many non-listed businesses throughout Europe and that individual Member States should be allowed to decide when and how to adopt this new international accounting standard. In its submission to the European Commission's consultation on IFRS for SMEs, Grant Thornton welcomes the new standard but foresees difficulties in mandating its use at EU-level in the near future. Grant Thornton believes in a more pragmatic approach that would allow decisions about the use of IFRS for SMEs to be taken by each Member State, rather than by the EU or by companies themselves.

Andrew Watchman, executive director of International Financial Reporting for Grant Thornton International explains, "Widespread adoption of IFRS for SMEs would improve the international comparability of accounts for non-listed businesses across Europe, to the benefit of cross-border trading partners, actual and potential investors and credit agencies."

Gary Illiano, national partner-in-charge of International and Domestic Accounting for the U.S. member firm Grant Thornton LLP notes, “The SME standard was designed to be adopted wherever it would meet the needs of these entities, whether in Europe, Asia, or the United States. It should be up to the individual country to determine if the SME standard meets the needs of its markets, not necessarily all of Europe, or Asia, or North America. Because the AICPA has recognized the IASB as a standard setter, IFRS for SMEs is perfectly acceptable for most private companies in the U.S. right now.”

Andrew Watchman adds, "We recognize that financial reporting by non-listed companies currently serves different roles and purposes in different Member States (for example, in some countries the accounting is linked closely with the tax system). This situation means that an EU-wide agreement on IFRS for SMEs, including criteria for the types or sizes of company that should use it, will be very hard to achieve in the short term. We believe instead that the EU should allow each Member State to decide which entities within their own jurisdiction are permitted or required to apply this new standard."



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