Development of the standard
The idea of doing a separate standard for SMEs was quite controversial for the IASB in as far as it was focused on reporting by listed companies. On top of that, once work started there was subsequently a great deal of debate about what should be the relationship with full IFRS and if any recognition and measurement concessions could be made.
The idea of doing such a project had been taken up by the IASC, which had even set up a working group. Consequently, back in 2001 in the early days of the IASB, the new organization considered whether to carry on with the project. At the time there was little enthusiasm, and the project did not get under way until 2003. There was a demand for accounting rules for SMEs coming from a number of sources. Developing countries wanted a ready-made set of accounting rules that were suitable for local business. IFRS as such were considered to be too sophisticated for most companies in such countries. At the same time the European Commission also thought that it would be useful to have rules for smaller companies that meshed with IFRS so that growing companies would have a logical progression.
In the late 1990s the UN’s Intergovernmental Group of Accounting Experts on International Standards of Accounting and Reporting (ISAR) was receiving a lot of calls for guidelines to be provided to deal with accounting in developing countries. Although ISAR is committed to working with IFRS, at that time the IASC had no plan to work ...
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