The International Accounting Standards Board (IASB) issued its long-awaited, International Financial Reporting Standard (IFRS) for small and medium-sized entities (SMEs) in July 2009. With the issuance of IFRS for SMEs, many SMEs, including private companies in the United States, will have the option of using a much simplified, IFRS-based accounting framework to prepare their financial statements. This article goes into depth around the definition of an SME, implications of this ruling, and other considerations for SMEs.

Some may find the simplified IFRS for SMEs an attractive alternative. The new U.S. Generally Accepted Accounting Principles (GAAP) comes in at 17,000 pages; IFRS for SMEs is a mere 230. Private companies may also find IFRS for SMEs to be a more relevant and less costly financial accounting and reporting standard than U.S. GAAP.

IFRS for SMEs is a simplified microcosm of full IFRS aimed at meeting the needs of financial reporting for private companies through a cost-benefit approach. The name is somewhat of a misnomer; in this case, size doesn't matter as much as public accountability does. IASB changed the name over the project's five-year history from "Non-publicly Accountable Entities" to "Private Entities," and coming back to its original name, SMEs.