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IFRS for SMEs — Education session

Date recorded:

The project manager introduced the agenda paper which provided a comment letter analysis on ED/2013/9 Proposed amendments to the IFRS for SMEs. Generally, most of the 57 respondents agreed with the proposals. However, some borderline issues were raised in the comment letters. Many of those issues had been discussed by the IASB when deliberating the ED and/or the original IFRS for SMEs pronouncement. She said that she would not ask decisions at this point as the IFRS for SMEs implementation group (SMEIG) would have to provide input first which would then be brought forward to the Board. Nonetheless, she asked the Board for initial thoughts on the analysis.

One Board member asked whether the process of how the SMEIG worked would be reviewed as it did not have the same due process as the IASB, but Q&As provided by the SMEIG could be interpreted as being part of the Standard. The project manager replied that a revised procedure for non-mandatory Q&As was already in place to distinguish them clearly from documents published by the IASB.

The Vice-Chairman noted that the respondents had raised some rather large policy issues; however, it made sense to wait for the SMEIG to comment on those.

One Board member pointed out that some responses were contradictory, for example, waiting to implement new standards in the SME standard to see if there were application issues versus closer alignment with full IFRSs. He said that this was probably dependent on whether the IFRS for SMEs were to address smaller entities who wanted relatively stable accounting requirements, or larger entities who wanted to be more aligned with full IFRSs.

A fellow Board member said that the criticised absence of options in the SME standard would actually make it easier for investors and lenders. The Vice-Chairman disagreed by replying that in his experience, lenders were interested in the value of property, plant and equipment and not in its historical cost.

The Board continued by discussing the scope, especially as concerns the applicability of the IFRS for SMEs to credit unions. The project manager said that SMEIG would discuss this topic. One Board member said that the EU was currently discussing financing for SMEs and whether those SMEs would be permitted to use a uniform accounting standard. He said that this might be a chance for the SME standard, however dependent on the scope.

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