Opening Statement of Ron Zilkowski, Chief Financial Officer, Cuisine Solutions, at the Roundtable on International Financial Reporting Standards in the U.S., July 7, 2011
Commission members and observers: I appreciate the chance to be here representing small filer registrants. I have been filing SEC reports since 1994 as a small $10 million dollar company that did an $8 million IPO and have seen the growth of several small companies and am part of one that went private. During this time I have experienced the evolution of the SEC and the public auditing firms during the implementation of the PCAOB and Sarbanes-Oxley. While I do support the implementation of one set of accounting rules for worldwide consistency in reporting I do so understanding that there will be a lot of pain. I think I speak for all small companies in saying that what we need is implementation help, realistic dates and minimal penalties.
I remember vividly the first meeting with our new consultants on how we were going to implement Sarbanes-Oxley. Our first consulting contract capped the initial fees at $150,000 but it was apparent we were learning as the consultants learned and we went through this quickly. Time tables for small businesses kept getting delayed but not with a lot of notice and it took over 3 years from the start to when the deadline finally hit. During this entire time we continued to spend money and learn the process. I transitioned to another filer who was later bought and then another who had not yet implemented. By then the costs of implementation had gone down dramatically, our consultant cost $5,000, since the body of information was now disseminated, the process was structured and the end result clearer to all.
My concern with the implementation of IFRS is that something similar will happen if the mandate is too soon for small companies. Big companies are still trying to figure it out and small companies, without those same resources, are still trying to find a proper seminar just to learn the nomenclature of IFRS before understanding how it changes their business. There are simply not enough resources at a fair price to implement this change yet. It even costs me $850 a year just to gain access to the FASB website now and they have no road map for conversion of IFRS at this time.
I also remember the upheaval of accountants and companies when the PCAOB started reviewing auditor files and finding inappropriate application or interpretation of arcane accounting standards. Controllers were fired or demoted for "accounting" expertise and no accounting firm wanted to be seen as weak on their accounting standards. Now what with IFRS? As we transition and file new accounting reports will we be held to interpretations of the new rules possibly resulting in weak controls due to our limited understanding? We are not allowed to ask our accounting firms for guidance or interpretations, we must justify it for them. As we transition this needs to be a learning experience for all of us. In the end the world benefits but all small companies need patience and practical guidance at a reasonable price.