Guide for micro entities in applying the IFRS for SMEs (IASB only)
The IASB staff introduced the Board to the guide (the “Guide”) it is preparing for micro entities in applying the IFRS for Small and Medium-sized Entities (IFRS for SMEs). The Guide is intended to help micro entities apply the requirements of the IFRS for SMEs. It is not a separate standard for micro entities. Rather, the Guide is intended to help ‘micro entities’ more easily identify the requirements in the IFRS for SMEs that are relevant to them (by including only those requirements from the IFRS for SMEs the staff considered likely to be relevant for a “typical” micro entity, although requiring an entity to apply the applicable requirements in the IFRS for SMEs for any transactions not dealt with in the Guide). Therefore, the staff noted that compliance with the Guide will result in compliance with the IFRS for SMEs.
The Guide does not define a micro entity in quantitative terms. Instead, it provides examples of typical characteristics of micro entities. The staff concluded that a strict definition is unnecessary for the purposes of the Guide given that it is considered possible for any small or medium-sized entity to use the Guide to prepare its financial statements since it refers to the IFRS for SMEs for any transactions not covered by the Guide.
Subsequent to presenting this overview (as well as an agenda paper which included one section of the Guide as an illustration of content), the staff asked the Board whether it had any feedback.
Multiple Board members expressed concern over where the Guide fits in the IFRS hierarchy. They asked if the Guide should be treated as a new Standard or education material to the existing IFRS for SMEs. The staff noted the Guide is neither a new Standard (as it has not been subject to due process requirements) nor education material (as it does not add any new material to the IFRS for SMEs). Instead, it is an extract from the IFRS for SMEs designed to facilitate the application of the IFRS for SMEs for micro entities. The staff noted that it intended to append the Guide to the IFRS for SMEs but the Guide would not form an integral part of the Standard.
No additional comments were raised during the meeting.