THE BURDEN OF ACCOUNTING STANDARDS FOR SMALL AND MEDIUM ENTERPRISES. A SUGGESTIVE SOLUTION

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Marco Sorrentino ORCID logo, Margherita Smarra ORCID logo

https://doi.org/10.22495/cocv11i4c1p7

Abstract

Anglo-Saxon accounting literature has traditionally connected the U.S. stock market crisis of the late 1960s and the consequent proliferation of complex and detailed accounting standards with the origin of a complex problem, commonly known as “accounting standards overload”, that can be defined along two different but correlated perspectives: 1. the question of comparing costs and benefits of complying with accounting standards by small and/or privately held entities; 2. the competitive disadvantage for public accountants (CPAs) who serve these entities. This paper begins with a background and purposes of the study (par. 1) followed by the analysis of the main literature of the general phenomenon of accounting standard overload (par. 2). Paragraph 3 focalizes on the cost-benefit analysis of complying with accounting standards by small and medium entities and then paragraph 4 describes the solutions adopted in the main Anglo-Saxon countries (par. 4.1), with a particular reference to the “Non-reporting entity” concept (par. 4.2). Finally, the authors share their personal observations (par. 5).

Keywords: Accounting Standards Overload, Compliance Costs, Differential Reporting, Reporting Entity, SME

How to cite this paper: Sorrentino, M., & Smarra, M. (2014). The burden of accounting standards for small and medium enterprises. A suggestive solution. Corporate Ownership & Control, 11(4-1), 223-232. https://doi.org/10.22495/cocv11i4c1p7