Accounting Standards for Small and Medium-sized Entities (SMEs)

Date recorded:

The purpose of this session was to give the Board some preliminary information on a nearly complete first draft of an exposure draft presented to the Board. The Board was not expected to discuss the specific content of the draft during this session, as the plan is to discuss this at the February 2006 meeting. Several Board members did note, however, that their overall view is that further simplification of the recognition and measurement principles is needed.

The Board had a lengthy discussion on how the IASB Framework should be incorporated into the SME standards. The draft ED currently includes extracts from the Framework covering objectives, qualitative characteristics, and elements definitions. An alternative would be to include the full framework or to cross-refer back to the Framework but not include it.

The ED also included some pervasive principles to which SMEs could look for guidance in the absence of a specific standard. Some Board members were critical of those principles on grounds that they are inconsistent with specific standards elsewhere in the ED or are inconsistent with provisions in full IFRSs.

The Board did not make any final decisions on this issue. The staff suggested preparing some amendments to this section of the ED and bring those back to the Board for further consideration.

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