An investigation on significance of adoption and implementation of IFRS for SMEs in malawi among non-incorporated construction companies: A study of selected SMEs in blantyre

Abstract

SMEs have come to accept the importance of harmonizing accounting information to remain in today's business environment. Hence, for better continuation of rendering their services, SMEs are required to keep books of accounts bound by the statutory rules of Malawi. In 2009, the IASB developed and published IFRS for SMEs in response to the need for high-quality internationally comparable and transparent financial information. The objectives of the study were to investigate the significance associated with the adoption and implementation of IFRS (International Financial Reporting Standards) for SMEs among non-incorporated construction companies in Malawi, to measure the extent of adoption, the mechanism to promote adoption, and related problems for the adoption of IFRS for SMEs. To achieve the determined objectives, the study was conducted and the questionnaire guides were distributed. The sample was selected based on non-probability sampling from the greater area of Blantyre contractors coming up with 30 participants. The collected facts were analyzed using SPSS to obtain tables, pie charts and bar graphs from which conclusions, recommendations as well as areas for further research were made. The investigation revealed that 60% of the construction companies did not adopt IFRS for SMEs. Little effort has been made by the council to encourage the adoption of IFRS for SMEs. The benefits one could accrue in adopting the standard include building strong investors and other stakeholders' confidence, enhancing comparability, and easy access to bank loans due to better credit rating, tax compliance, increased transparency, and accountability, and played a big role in making effective decisions. This study recommends the need for continuous education, awareness campaigns, and communication to contractors on issues associated with IFRS for SMEs and should commence in earnest. Furthermore, a rigorous IFRS for SMEs capacity-building programs should be embarked upon by regulatory bodies (the NCIC in corroboration with ICAM) and training institutions to provide the required manpower for the successful implementation of the IFRS for SMEs.