The report focusses on the issue of how, if at all, financial reporting by SMEs should be regulated. It follows the generally accepted view that financial reporting requirements should be set on the basis of a cost-benefit analysis that encompasses not just the costs and benefits to the reporting entity but to society as a whole, and sets out the various parties whose costs and benefits should be taken into account.

However, the main theme of the paper is to highlight the fact that, to date, very little research has been conducted on these costs and benefits and that, without this, it is not possible to develop policies that are based on evidence rather than opinion.  Accordingly, the authors believe that a substantial programme of research into the effects of regulating and deregulating financial reporting by SMEs is needed.

The paper also briefly considers the effect of the IFRS for SMEs on SME financial reporting, although its suitability as a financial reporting framework for SMEs is not considered in detail given that the standard itself makes clear that it is not in fact aimed at SMEs but instead at unlisted companies.

An executive summary and the full research paper are available from the ICAEW website.