Afa Assignment Essay

1658 WordsOct 5, 20137 Pages
1 Introduction The International Financial Reporting Standard for small to medium-sized entities (IFRS for SMEs) was issued by the International Accounting Standards Board (IASB) in July 2009. The IFRS for SMEs is separate from Full IFRSs and it is a simplified version of Full IFRS which many principals of its recognition and measurement requirements have been omitted or simplified. For example, IFRS for SMEs simplifies the methodology for determining how assets, liabilities, income and expenses are recognized and measured (Robert, 2010). It also tailored for the needs and capabilities of private entities that do not have publicly accountability and publish general purpose financial statements for external users. Apart from this, the IASB took into account the needs of the users of SME financial statements and cost-benefit considerations in order to reduce the burden on SMEs. As shown in table 1, the number of required disclosures has been significantly reduced and omits standards those are irrelevant to private companies. For example, interim financial reporting and segment reporting are gone (Robert, 2010). Table 1: New Standard Requirements Around the world, the use of IFRS for SMEs is growing rapidly. Over 60 jurisdictions have already adopted IFRS for SMEs (ISAB, 2010). Many companies will also be making the transition from either Full IFRS or other local GAAP in the coming years. According to the survey in the Pricewaterhousecoopers (2006), it indicated that the adoption of IFRSs for SMEs would provide a lot of benefits to small to medium-sized entities. The adoption can strength SMEs’ relationships with credit institutions and enhance the overall confidence in the accounts of SMEs. It can also make SMEs easier to implement planned cross-border acquisitions and to initiate proposed partnerships cooperation

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