IFRS for SMEs (Small and Medium-sized Entities)

IFRS for SMEs PDF

The IFRS for SMEs Standard provides a self-contained set of international accounting standards that is simpler than full IFRS Standards. Its use should increase confidence in financial statements of SMEs and reduce the significant costs involved in maintaining IFRS Standards on a national basis. The IFRS for SMEs Standard contains a number of exemptions from the disclosure requirements in full IFRS Standards, such as frequency of reporting and the need for comparative information. These exemptions are designed to ensure that the IFRS for SMEs Standard does not result in a two-tier system of reporting for SMEs.

Private companies can choose whether to report in accordance with IFRS for SMEs or the United States GAAP. However, IFRS for SMEs may present additional challenges in the preparation of financial statements that are compliant with the IFRS for SMEs Standard. The AICPA Accounting Standards team encourages IFRS for SMEs users and preparers to keep abreast of the latest developments in the IFRS for SMEs Standard. A comparison resource will be available as the work is completed, and the Accounting Standards team welcomes input from members of the accounting profession and others with expertise in IFRS for SMEs and US GAAP.

IFRS for SMEs Standard

A private company in the United States can use IFRS for SMEs if it meets certain requirements. These include publishing general purpose financial statements for external users and having no public accountability. However, many factors may influence whether a private company chooses to apply IFRS for SMEs or another framework commonly agreed at the EU level.

A modified version of full IFRS Standards, IFRS for SMEs is based on recognised concepts and pervasive principles. It also allows easier transition to full IFRS Standards if the company decides to become publicly listed. Its reporting requirements are shortened and its language is simplified, making them easier to understand. Disclosures are reduced for IFRS for SMEs in order to reduce the cost burden of applying the standard.

In addition to simplifying the accounting for leases, IFRS for SMEs clarifies that it is appropriate to recognise deferred tax assets and liabilities in the same amount as current taxes payable on those amounts and to record a single balancing entry in the profit and loss account when those amounts are recognised. It also introduces a new method for measuring the fair value of an asset or liability, using the spot rate at the time the asset or liability is initially recorded.