Yet, private companies may see some benefits from a move to IFRS during 2012. The American Institute of CPAs
(AICPA) has already authorized U.S. privately held companies to issue their financial statements in accordance with IFRS as issued by the IASB.
In the next few months, significant changes to FASB and IASB standards will impact items such as revenue recognition, leases and financial statements. A move to IFRS may be easier than implementing these standards.
While the cost of transition for public companies is expected to be expensive, private companies will fare better in implementing a change to IFRS because:
- Private companies can control the timing of internal control adjustments, perhaps utilizing scheduled changes or system upgrades to implement them.
- Smaller companies lack the complexity of larger companies and may find the reporting differences between U.S. GAAP and IFRS are limited.
- Private companies generally have more simplified reporting procedures, and
- The standards are already converged on many topics.
In addition, IFRS has standards dedicated to small to medium business that do not have public interests. The “IFRS for Small and Medium Entities” significantly reduces the cost and time to prepare financial statements while still preserving the financial statement quality.
For a detailed article on deciding to move to IFRS and how the change could be implemented, please see Business Finance