The Institute of Management Accountants (IMA) has launched a new
small business financial and regulatory affairs committee that is
designed to address the business operational issues unique to small
companies. The committee will also provide input to regulatory
bodies regarding the development of standards and interpretations.
An inaugural meeting will take place in March.
IMA president and chief executive Paul Sharman estimates as many as
80 percent of the institute’s members are part of the small
business community. Sharman told TA that one push for the
formation of the committee came from the US Financial Accounting
Standards Board (FASB). “We were meeting with the board members of
FASB and we got this question from the chair about the structure of
our financial reporting committee and whether there might be some
other views from other participants in our organisation – like
small companies – that perhaps would be helpful to hear,” Sharman
said.
IMA director of professional advocacy Linda Devonish-Mills will be
the committee’s staff liaison. She is also the staff liaison for
the institute’s financial reporting committee (FRC). Devonish-Mills
said one reason why there is a need for an IMA small business
committee is the development, in recent years, of small business
advisory committees for the FASB and the US Securities and Exchange
Commission (SEC).
Mills explained that for the past 25 years the FRC has been the
IMA’s “voice” in terms of financial reporting issues, meeting
directly with representatives from the FASB and the SEC. However,
the FRC has not developed a relationship with the regulators’ small
business advisory committees. “So the timing is perfect for us to
develop the small business committee so they also can have a chance
to interact specifically with the advisory committees the major
regulatory bodies such as FASB and the SEC has developed,”
Devonish-Mills said, adding that the new committee will also act as
a “resource” for FASB’s private company financial reporting
committee.
One issue that will be raised at the March meeting is accounting
standards. Sharman said at present there is no difference in
financial reporting standards for small and large companies in the
US as companies of all sizes use the same GAAP. “The introduction
of IFRS is causing waves of dialogue and then the discussion of
‘IFRS light’, as I would call [IFRS for SMEs], is creating further
discussion about how many sets of standards do we need,” Sharman
said.
Sharman added that there is always interesting debate from various
stakeholders about regulation: “There is a small business task
force government entity that tends to be influential and everybody
in government is always trying to make it easier for smaller and
private companies because it’s the engine of the United States
economy. Having said that, there are other forces, standard-setting
bodies and people who represent the accounting firms, who would
like to bring more influence and shape the rules – for example
‘let’s have some more auditing’.”
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By GlobalDataAnother issue the small business committee will look at is Section
404 of the Sarbanes-Oxley Act. “[The IMA has] been very vocal about
our concerns in terms of the scalability for small business
practices implementing such regulation,” Devonish-Mills said.
“Right now we don’t think it’s balanced.”
