Abstract
The purpose of the study was to explore the extent to which Small and Medium Enterprises (SMEs) in the Cape Coast Metropolis (CCM) comply with International Financial Reporting Standards (IFRSs). The study further looked at firm attributes (size, profitability, audit type, internationality, type of SME, and leverage) that influence the level of SMEs’ compliance with IFRSs. The descriptive design was adopted for this study. The study sampled 89 SMEs within the metropolis, however, data from 67 medium scale enterprises were used. A self-constructed compliance index (CINDEX) checklist was the instrument used. Both descriptive and inferential statistics were used in analysing the data. The findings revealed that medium scale enterprises average level of compliance of IFRSs is 77.9%. Also, enterprise’s attributes such as types, profitability, and audit type are able to influence 70.6% of the variance in the level of enterprise’s compliance with IFRSs disclosure requirements. The study recommended that the National Board for Small Scale Industries (NBSSI) and the owner/managers of the various SMEs in the metropolis should liaise with Institute of chartered Accountant Ghana (ICAG) to organise regular training programmes, for accountants within the sector, intended to provide practical guide for compliance with the International Accounting Standard Board (IASB).
Highlights
The ever-increasing role and focus on financial accounting among Small and Medium-Sized Enterprises (SMEs) cannot be over emphasised because of its vital end products
As the forces of globalisation increase momentum, more and more countries are opening their doors to foreign investment and as business themselves expand across borders, both the public and private sectors are increasingly recognising the benefits of having a uniform financial reporting framework supported by strong globally accepted accounting standards (Zorklui & Barbie, 2003)
Attempt towards harmonisation led to the establishment of International Accounting Standards Committee (IASC) in 1973 which released a series of standards called International Accounting Standards (IAS) in a numerical sequence that began with IAS One (1) and ended with IAS 41 between the years 1973 to 2000 which was published in December, 2000 (Institute of Charted Accountants England and Wales, 2010)
Summary
The ever-increasing role and focus on financial accounting among Small and Medium-Sized Enterprises (SMEs) cannot be over emphasised because of its vital end products. SMEs are able to identify, measure, classify, and communicate their financial information to owners and other stakeholders which permit users to make informed judgment and decisions. Investors who have funds to invest or lend may decide where to place resources based on the financial reports. As the forces of globalisation increase momentum, more and more countries are opening their doors to foreign investment and as business themselves expand across borders, both the public and private sectors are increasingly recognising the benefits of having a uniform financial reporting framework supported by strong globally accepted accounting standards (Zorklui & Barbie, 2003). Attempt towards harmonisation led to the establishment of International Accounting Standards Committee (IASC) in 1973 which released a series of standards called International Accounting Standards (IAS) in a numerical sequence that began with IAS One (1) and ended with IAS 41 between the years 1973 to 2000 which was published in December, 2000 (Institute of Charted Accountants England and Wales, 2010)
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