The CCDG announced the new standard for small and medium enterprises (SMEs) last month and is seeking comments from the public.
The proposed rules closely relate to the new SME financial reporting standards put forward by the UK-based International Accounting Standards Board (IASB) in February.
What are some of the proposed changes highlighted?
- Choices for accounting treatment have been removed and topics that are not generally relevant to SMEs, such as share-based payments and segment reporting, have been cut.
- Methods for recognition and measurement have also been simplified. For example, for goodwill impairment, SMEs can use an indicator approach rather than an annual impairment test.
What are the potential impacts?
- CCDG expects the current volume of accounting standards for SMEs to be cut by more than 85 per cent.
- The auditors are looking at 10-15% reduction in audit fees. But is it fair? We will wait and see till at least after the first done under the new rules possibly end of next year.
The proposed rules are now opened for your comment till Sep 1, 2007.
I am delighted by the news as this would help to ease the frustration I experienced recently in dealing with some fellow professionals. Story about this in my next article.