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IFRS FOR SMALL AND MEDIUM ENTITIES (SMEs)
The objective of the International Accounting Standards Board (IASB) is to produce accounting standards which result in financial statements giving relevant, reliable and useful information which are of high-quality and understandable.
In July 2009, the IASB issued the International Financial Reporting Standards for Small and Medium-sized Entities (IFRS for SMEs), which those entities who fall under the scope of ‘small and medium’ can adopt as their financial reporting framework. Offering reduced disclosure requirements from the mainstream IFRS, IFRS for SMEs provides an alternative framework that eligible entities can apply.
IFRS for SMEs is a standalone standard and was developed by incorporating the existing principles in full IFRS. However, due to its target audience, there are a number of accounting standards and practices which are not covered by the IFRS for SMEs, such as:
- Earnings per Share (IAS 33).
- Interim Financial Reporting (IAS 34).
- Segment Reporting (IFRS 8).
- Insurance Contracts (IFRS 4).
- Assets held for sale (IFRS 5).
SMALL–MEDIUM ENTERPRISE
There is currently no definition in IFRS as to what constitutes a ‘small–medium’ enterprise and the decision as to who qualifies as an SME currently lies with national regulatory authorities and standard-setters. Currently such regulatory authorities and standard-setters usually set eligibility criteria to qualify as an SME such as turnover tests, statement of financial position ...
