Standards for Small and Medium-Sized Entities

Date recorded:

The Board reviewed a revised draft of a Discussion Paper on Accounting Standards for Small and Medium-sized Entities (SMEs). The draft reflected decisions that had been made by the Board in March 2004 as well changes resulting from a review by members of the IASB's Advisory Panel on SMEs.

The Board asked that further changes to the draft be made, including the following:

  • Clarify that the objectives of financial reporting set out in the IASB Framework are appropriate for SMEs as well as for entities following full IFRSs.
  • Full IFRSs, rather than IASB standards for SMEs, should be regarded as appropriate for entities that are economically significant in their home country based on criteria such as total assets, total revenue, number of employees, degree of market dominance, and the nature and extent of external borrowings.
  • If an SME that otherwise is following IASB standards for SMEs elects to follow a treatment in an IFRS that differs from the treatment in the related IASB standard for SMEs, it must follow the entire IFRS, not just selected parts of it.
  • Explain that while initially the Board will issue a single comprehensive exposure draft of 'SME versions' of all existing IFRSs (including IASs) and interpretations, once the initial set of IASB standards for SMEs is in place the Board expects to keep them up to date by including SME-related proposals in each new exposure draft or draft interpretation. Moreover, the effective dates of new or revised IASB standards for SMEs would be the same as the effective dates of new or revised IFRSs.

The Board voted (12 in favour, 1 opposed) to approve the Discussion Paper for publication subject to the opportunity to review and comment on a ballot draft of the document. There will be a 90-day comment period.

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