GRANT THORNTON WELCOMES NEW GLOBAL IFRS STANDARD FOR PRIVATELY HELD BUSINESSES
30.10.2009 10:36 GMT+04:00
/PanARMENIAN.Net/ 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
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."