Abstract
Orientation: Small and medium-sized entities (SMEs) play a crucial role in the South African economy. The financial reporting framework applicable to SMEs may contribute to the success of the SME. This study was exploratory in nature and followed an interpretive approach to seek an in-depth understanding of the application of the International Financial Reporting Standards for Small and Medium-Sized Entities (IFRS for SMEs) in South Africa. Research purpose: This article explores the perceptions of South African accounting practitioners regarding the post-implementation of the IFRS for SMEs in the South African SME sector. Motivation for the study: South African research on IFRS for SMEs is scarce. This study was designed to contribute to the scarce body of literature on IFRS for SMEs and will benefit both the South African and international accounting profession. Research approach/design and method: In-depth semi-structured interviews with 21 accounting practitioners were carried out during 2017 and 2018. An interpretive approach was adopted to analyse the data into themes providing the insight into the perceptions of South African practitioners. Main findings: Overall, there appears to be an approval of IFRS for SMEs. The uniformity associated with IFRS for SMEs is one of the significant advantages, while factors such as the age of the practitioners, the use of automated software systems and South African legislative requirements affect the relative merit of using the standard. Practical/managerial implications: The use of the interpretive style will assist professional accounting organisations, standard setters and regulators in understanding the various benefits and drawbacks of the IFRS for SME framework. Contribution/value-add: This article is the first to explore the in-depth views of accounting practitioners after IFRS for SMEs was adopted in South Africa. The article also highlights the challenges faced by accounting practitioners in developing economies that service SMEs.
Highlights
Small and medium-sized entities (SMEs) may play an important role in the development of a country’s economy, in relation to the creation of employment opportunities (Albu et al 2013; Bartůňková 2013; Bohušová & Blašková 2013; Dang-Duc 2011; Department of Trade and Industry [DTI] 2008a; Mandilas et al 2010)
This is in line with existing literature, which indicates that a variety of definitions may be ascribed to the term ‘SME’ (DTI 2008b; International Accounting Standards Board (IASB) 2015a; Schutte & Buys 2011b; South Africa 1996; Tudor & Mutiu 2008)
Small and medium-sized entities are not bound by a common factor and, as a result, there exists a broad range of entities distinguished by no specific criterion
Summary
The success of SMEs is important in a country such as South Africa as the global economic crisis in recent years has triggered a knockon effect, which in turn has increased the rate of unemployment in the country (DTI 2013). The accountability and reporting of an SME are among the important factors that may contribute to the success of the SME. In this regard, the DTI has recognised the need to create an environment that balances good governance and effective regulation with the flexibility required to promote the economy (DTI 2013). Accounting rules and accepted practice affect what is considered organisationally and socially rational and https://www.jefjournal.org.za
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