Confused over the size of an SME?

The International Federation of Accountants has published a financial reporting standard applying to SME organisations. But, argues M Institute co-founder Paul Druckman, the new standard will only give rise to confusion. Paul explains why.

In July 2009 the International Federation of Accountants (IFAC) published an International Financial Reporting Standard (IFRS) designed for use by small and medium-sized entities (SMEs). SMEs are estimated to represent more than 95 per cent of all companies. The standard is a result of a five-year development process with extensive consultation of SMEs worldwide.

This has created a dilemma for countries across the world in reflecting on IFRS implementation in deciding how big is an SME? Leading to a headline in Accountancy Age magazine: Confusion over SME size could complicate international rules.

Clive Lewis, head of SME issues at the Institute of Chartered Accountants in England and Wales (ICAEW), stumbled across the curious accounting issue while in conversation with an African colleague at a function. ‘In a casual discussion we couldn’t find any company that wouldn’t fit the definition of SME in Botswana,’ he said.

Now Clive should know better than that : he should be able to provide a route to the solution, as M Institute has been in dialogue with him and the ICAEW since its formation about this definition dilemma. We at M Institute are very clear on this: it is all about the characteristics of a business, not its size.

When will they learn? When will they listen? Let's have a meaningful conversation around the definition of an SME, and our characteristics model can be a straightforward route to a solution. Come on, people: talk to us!

Comments

[Robert Craven]

Spot On!
Robert Craven

[Robert Craven]

I am not an “SME”. I am a small, or owner-managed, or independent, or growing, or self-employed, or new, or young, or boutique business. But I am not an SME (pronounced S.M.E.)

Only corporate people have the smug arrogance and ignorance to use such a phrase. When I go to a party I do not say "Hi, I am an S.M.E.” And as for the “Smeeee” word – what is that all about? I never ever call myself a “smeeee”. Excuse me!!
http://robert-craven.blogspot.com/2009/07/marketing-to-independentgrowingprivatel_27.html

Robert