In my almost 20 years in the banking industry, I’ve come across dozens of owners and managers of small private companies who cringe when it comes time to prepare financial statements. That’s because for many of them, the process is complicated, time consuming and costly. Moreover, a number of rules they are required to follow do not deliver financial information relevant to their businesses. These small- and medium-sized entities have been in need of a financial reporting option that is tailored to their circumstances and produces financial statements and information that their bankers can use and rely upon. Now, finally, that financial reporting framework is being made a reality.
One of my most rewarding professional experiences has been serving on the task force that is developing the new Financial Reporting Framework for Small- and Medium-Sized Entities. What’s a SME? No standard definition exists, but the acronym is self explanatory – small and medium size entities, which happen to make up about 20 million for-profit companies in the United States.