Abstract
<p>The International Financial Reporting Standard for Small and Medium-sized entities (IFRS for SMEs) was published as a standard by the International Accounting Standards Board (IASB) during July 2009. During 2007 South Africa became one of the first countries and the first country in Africa to early accept the proposed accounting standard (exposure draft of an IFRS for SMEs). The accounting standard will probably also be accepted by numerous other countries. The aim of this article is to investigate the applicability of this accounting standard. The results indicated that the IFRS for SMEs remains too comprehensive for the majority of small companies. The IFRS for SMEs does not satisfy the needs of South African users of small company financial statements, and as a result the accounting requirements should be simplified.</p><p><strong>KEYWORDS:</strong> Financial accounting; Financial reporting requirements; IFRS for SMEs; Small companies; Users of financial statements; Small company financial statements.</p>
Highlights
AND MOTIVATIONThe International Financial Reporting Standard for Small and Medium-sized entities (IFRS for SMEs) was published as a standard by the International Accounting Standards Board (IASB) during July 2009 (IASB, 2009a; IASB, 2009b)
21% of small practitioners are of the opinion that small company financial statements comply with all the applicable accounting standards (IFRSs)
The majority of small practitioners (79%) indicated that small company financial statements do not comply fully with the applicable accounting requirements. This confirms that in practice the reporting requirements are inappropriate for small companies and that accounting requirements do not satisfy the needs of the users
Summary
The International Financial Reporting Standard for Small and Medium-sized entities (IFRS for SMEs) was published as a standard by the International Accounting Standards Board (IASB) during July 2009 (IASB, 2009a; IASB, 2009b). SMEs will have a common high quality and internationally respected set of accounting requirements.” (IASB, 2009c). During 2007 South Africa became one of the first countries and the first country in Africa to early accept the proposed accounting standard (exposure draft of an IFRS for SMEs) (SAICA, 2007a). Since the IFRS for SMEs has been adopted in Australia as part of their differential reporting system. The accounting standard will probably be accepted by numerous other countries (Sealy-Fisher, 2009:32)
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