Wiley IFRS: Practical Implementation Guide and Workbook, 3rd Edition

Chapter 41

IFRS FOR SMEs

INTRODUCTION

The principal aim when developing accounting standards for small to medium-sized enterprises (SMEs) is to provide a framework that generates relevant, reliable, and useful information which should provide a high-quality and understandable accounting standard suitable for SMEs.

In July 2009, the International Accounting Standards Board (IASB) issued the IFRS for Small and Medium-Sized Entities (IFRS for SMEs). This Standard provides an alternative framework that can be applied by eligible entities in place of the full set of International Financial Reporting Standards (IFRS).

The IFRS for SMEs is a self-contained Standard, incorporating accounting principles based on extant IFRS, which have been simplified to suit the entities that fall within its scope. There are a number of accounting practices and disclosures that may not provide useful information for the users of SME financial statements. There are a number of accounting standards and disclosures that may not be relevant for the users of SME financial statements.

DEFINITION OF SME

There is no universally agreed definition of an SME. No single definition can capture all the dimensions of a small or medium-sized business, or can be expected to reflect the differences between firms, sectors, or countries at different levels of development. Most definitions based on size use measures such as number of employees, balance sheet total, or annual turnover. However, none of these measures ...