As IFRS case studies begin to filter out, an interesting question arises: How will the conversion to/adoption of IFRS in the United States affect private companies?

If the widespread use of U.S. GAAP by U.S. private companies is any indication, IFRS consultants and implementers will find eager clients among private companies as well as public companies.

Some U.S. private companies currently use IFRS, according to IFRS experts, although in most cases these companies do so because they are part of a non-U.S. company (or an investor or venture partner) that already uses IFRS.

There are some unique IFRS issues facing private U.S. companies.

“Many of the challenges that IFRS conversion poses are the same for companies, whether public or private,” reports D.J. Gannon, national leader of Deloitte’s IFRS center of excellence. “Perhaps the biggest challenge is a cultural one. With the use of full IFRS or IFRS for SMEs, companies, auditors, and users will need to adapt to an accounting and financial reporting framework that requires more judgment and less reliance on detailed rules and bright lines. Companies will be required to understand base principles and objectives, how judgments are made, and how they are applied. Such an approach to accounting requires a change in mind-set.”

Gannon notes that private companies should consider whether they would adopt full IFRS or IFRS for SMEs.

“Private companies should carefully consider their capital requirements to support their growth strategies,” he explains. “If the ultimate goal is to go public, companies may consider full IFRS. If the goal is not going public, private companies may want to understand if their lending institutions and creditors are comfortable with IFRS for SMEs.” ###