The release of IFRS for SMEs gives the international standard-setter a leg up on its American counterpart, the Financial Accounting Standards Board, which has been toying with the idea of issuing "little GAAP" since 2004. Like IFRS for SMEs, little GAAP would be a truncated version of the 25,000 pages that make up full U.S. GAAP, the rules that are considered the "gold standard" by many companies and investors around the world.

Many U.S. critics turn their thumbs down at the little GAAP concept. "The accounting profession in the United States has consistently rejected Big GAAP/Little GAAP over the years," the New York State Society of Certified Public Accountants noted in a March comment letter to the Securities and Exchange Commission. In the letter, the accountants expressed concern about, among other things, the quality of IFRS compared with U.S. GAAP in response to an SEC plan to require U.S. public companies to file financial results using IFRS. Their objection to little GAAP is rooted in a belief that the American rules, which are more prescriptive than IFRS, should not be tinkered with, and that introducing exceptions to full U.S. GAAP is not an appropriate way to deal with private-company issues.

Nevertheless, it is impossible to deny that companies, both public and private, increasingly operate in a global marketplace, where a single set of high-quality global accounting standards would prove useful. Last month the U.S. Treasury reported that by the end of 2008, foreign investors held more than $10.3 trillion worth of long- and short-term U.S. securities, both equity and debt — a $600 billion increase from the year before. At the same time, American investors held $4.3 trillion worth of foreign securities, down from the $7.2 trillion they held in 2007.

That kind of market pressure may eventually push U.S. companies to adopt IFRS. To be sure, the IASB and FASB are already seven years into their joint project to converge IFRS and U.S. GAAP, and the SEC continues to study the idea of potentially weaning American companies off of GAAP and requiring financial statements to be prepared in IFRS. "Given today's economic and financial environment, we're seeing a fundamental shift in accounting and financial reporting toward global standards," says Gannon. "This shift is not limited to public companies. Private companies, in particular midsize ones, may want to reevaluate their approach to financial reporting and carefully weigh their financial-reporting alternatives."

While proponents of IFRS for SMEs claim that the long-term benefit of having access to the global markets outweighs the initial conversion costs — which have not yet been estimated — there are some implementation challenges ahead, says Collemi. For instance, companies will have to conduct a line-by-line analysis of accounts to weed out GAAP vs. IFRS differences, make changes to information technology systems to accommodate IFRS, and rewrite revenue agreements with customers, as well as third-party lending agreements, that include covenants based on GAAP or full IFRS measures.

In March consultancy Accenture estimated that public and private companies with annual revenue between $1 billion and $4.9 billion would spend 0.731% of that revenue to convert to IFRS. Companies with revenue over $50 billion would only spend 0.103% of their top line. Still, once the changes are implemented, IFRS light is supposed to result in a "streamlined" accounting process that saves smaller companies money by eliminating the reconciliation of multiple GAAPs, says Collemi. Adopting IFRS light means "companies will be speaking one accounting language."

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