Monday, July 27, 2009

Deloitte Survey Finds Preference for Separate Accounting Rules for Private Firms

WebCPA posted an interesting article that starts with something not surprising at all: "Slightly more than half of small and midsized businesses prefer to have a separate set of accounting standards for private companies."

Many, including myself, have addressed this topic repeatedly. The plain truth is that accounting standards are more complex than ever. Small and midsized businesses that issue GAAP financial statements have been asking for a simpler alternative. IFRS has come out with an "IFRS Light" that may win adoption in the US, but even that is still full of complex rules.

There is an alternative out there already - non GAAP statements. Many small and midsized businesses issue their financial statements on an income tax basis. This is not a perfect alternative because this makes those financial statements more difficult to compare to a GAAP statement, and lenders may not accept income tax basis financial statements.

My opinion: if something doesn't happen to ease the burden on small and midsized businesses, you are going to see more income tax basis statements because the extra cost to produce GAAP statements won't be worth it.

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