Deloitte comment letter on IFRS for SMEs comprehensive review
22 Nov, 2012
Deloitte’s IFRS Global Office has submitted a letter of comment to the International Accounting Standards Board (IASB) on its Request for Information 'Comprehensive Review of the IFRS for SMEs'.
We agree that the triennial review of the IFRS for SMEs should be comprehensive in its scope, but believe that some underlying principles for making changes to the Standard would be beneficial in ensuring that a consistent approach is followed and that the IFRS for SMEs remains coherent in its approach and its relationship to full IFRSs.
The letter outlines that we believe that the following principles should be followed:
- The IFRS for SMEs should not be amended to reflect changes in full IFRSs as complex and significant as the revised requirements on consolidation, accounting for joint arrangements and measurement of fair value included in IFRS 10 , IFRS 11 and IFRS 13 respectively before those changes are effective. Rather, the suitability of a significant new standard should be assessed for its suitability for incorporation into the IFRS for SMEs once a track record of its application under full IFRSs emerges. The post-implementation review of the new standard may provide an opportunity to make this assessment
- Any incorporation of a full IFRS standard into the IFRS for SMEs should retain the integrity of the conceptual model applied in that standard
- In assessing the suitability of a full IFRS standard for incorporation into the IFRS for SMEs, the Board should (as noted in the October 2010 Guide to the IFRS for SMEs) take into account the costs to, and the capabilities of SMEs to prepare financial information before moving to any more complex model
- Reversal of the IASB’s decisions to include simpler requirements in the IFRS for SMEs than are included in full IFRSs should only be considered where there is clear evidence that this is necessary.
The letter also comments on other issues, such as local public authorities being best placed to judge how the financial reporting framework for entities using the IFRS for SMEs is applied in their jurisdictions, the need to articulate clearly the type of entity for which the IFRS for SMEs is designed, and the drafting process for any amendments to the standard.
Click for access the comment letter.
