The IASB restricts the use of the standard to ‘non-publicly accountable’ entities. This it defines as companies who do not have debt or equity securities listed in a public market, and do not hold assets in a fiduciary capacity. The latter qualification would rule out use of the standard for banks, insurance companies and similar organizations. The standard points out, though, that the IFRS for SMEs can be used by subsidiaries of a listed group that uses full IFRS, provided that the subsidiary does not itself meet the definition of being publicly accountable. When a company uses the standard as its comprehensive basis of accounting, it should specify in its accounting policy note that its financial statements conform to the IFRS for SMEs.

The IASB restricts the use of the standard to ‘non-publicly accountable’ entities

The financial statements have to be ‘general purpose financial statements’ that are issued for the benefit of external users. The examples of external users are owners ‘who are not involved in the management’ and existing and potential creditors. The objective of the financial statement is to ‘provide information about the financial position, performance and cash flows of the entity that is useful for economic decision-making by a broad range of users who are not in a position to demand reports tailored to meet their particular information needs’. The second objective is to ‘show the results of the stewardship of management – the accountability of management ...

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