New Directions of Financial Reporting Within Global Accounting Standards for Small and Medium-Sized Entities

Abstract

The International Accounting Standards Board (IASB) is currently working on a project to develop accounting standards suitable for entities that (a) do not have public accountability and (b) publish general purpose financial statements for external users. This article presents the current status of IASB activity on this new direction of financial reporting. Our study has as key objectives to review the extant of academic literature and to analyze, based on the questionnaire conducted by IASB, the impact of a set of new IFRSs for small and medium entities (SMEs) on practitioners and on professional organizations. The literature review unearthed a variety of prior studies on SMEs. Currently, in most jurisdictions SMEs are subject to relaxed regulation as determined at the national level, taking on board specific economic and local conditions. However, the increasing significance of SMEs in the global economy, the burden/inapplicability of full International Financial Reporting Standards (IFRS) and the potent arguments in favour of differential reporting have drawn the attention of international regulators and given rise to the proposed new regulatory regimes for SMEs. We briefly present the content of IASB recent SME exposure draft and, as conclusion we comment the answers received at the questionnaire conducted and their influence on the requirements of the new SME reporting standards.