Published On:Wednesday, March 10, 2010

By NEIL HARTNELL

Tribune Business Editor

BAHAMIAN accountants were last night voting on whether to adopt standards that the Bahamas Institute of Chartered Accountants (BICA) president said could "reduce audit fees by at least 10-20 per cent" for Bahamian small and medium-sized enterprises.

The vote was taken after Tribune Business went to press, but discussing it beforehand, Reece Chipman told this newspaper that if BICA members and practitioners were in favour, the Bahamas would be one of the last Caribbean nation to adopt International Financial Reporting Standards (IFRS) for small and medium-sized companies.

The standards, which have been available for use since July 2009, were developed by the International Accounting Standards Board (IASB), the global standard-setting body, in a bid to reduce audit costs and make the process less onerous for small companies.

"We are doing this seminar because the IASB would like to know if the Bahamas is going to adopt IFRS for small and medium-sized businesses as generally accepted auditing standards for the Bahamas," said Mr Chipman, speaking to Tribune Business before the meeting and vote.

"Tonight, we're going to take a vote on whether to adopt it. We would be one of the last countries in the region to adopt it."

Last night's meeting at the British Colonial Hilton involved a presentation on the administrative and technical requirements related to the new IFRS standards, which Mr Chipman said should reduce audit fees and the process facing Bahamian small and medium-sized firms if adopted.

"I would think it should reduce the audit fees by at least 10-20 per cent, because the disclosure requirements are not as much," Mr Chipman told Tribune Business.

Adoption of the IFRS standards, he explained, would lower the reporting and disclosure requirements associated with small and medium-sized company audits, something likely to be welcomed by the Bahamas Chamber of Commerce and other private sector organisations, which have long argued that prohibitive audit costs have deterred many Bahamian firms from hiring external auditors.

In a letter sent to BICA members, Mr Chipman and Basil Ingraham, head of BICA's IFRS for small and medium-sized business committee, said the IASB standard defined these companies as those that were not publicly listed, and therefore had no public accountability obligations.

In addition, these firms only "publish general purpose financial statements for external users. Examples of external users include owners who are not involved in managing the business, existing and potential creditors, and credit rating agencies".

"It's for companies that have no public accountability and just publish general financial statements for general users, potentially creditors and credit rating agencies," Mr Chipman told Tribune Business of the IFRS standards.

"If you have debt and equity instruments that are not traded in the public markets, you don't have full public accountability and don't have full disclosure obligations."

He added: "The benefit from adopting these standards would be that a lot of small and medium-sized enterprises here are not public entities.

"If they do not have to fully disclose their financial information and use full disclosure, the benefits would be reductions in the cost of audit fees. There are lots of accounting requirements that are not required from small and medium-sized enterprises, as with full disclosure."

Full disclosure, Mr Chipman said, would require the provision of information such as borrowing costs and how capital was raised and expensed. Audit fees would be reduced because Bahamian accountants would no longer have to check these items.