Second Comprehensive Review of the IFRS for SMEs Standard

Date recorded:

Project plan for second phase of the review (Agenda Paper 30)

The paper discusses the project plan for the second phase of the second comprehensive review of the IFRS for SMEs Standard, following the completion of the first phase with the publication of the Request for Information (RFI) Comprehensive Review of the IFRS for SMEs Standard in January 2020.

The second comprehensive review of the IFRS for SMEs Standard includes many IFRS Standards in its scope, in part, because it re-examines some IFRS Standards from the scope of the first comprehensive review.

Staff recommendations

  • The staff recommend that the Board move the project from its research programme to its standard-setting work plan
  • The staff recommend that the Board confirm that the scope of the review is as set out in the RFI
  • The staff recommend that the Board agree to work in the direction of publishing an Exposure Draft, proposing amendments to the IFRS for SMEs Standard for new requirements that are in scope of the review
  • The staff recommend that the Board agree to develop proposed amendments to the IFRS for SMEs Standard using the approach which the Board consulted on in the RFI—treating alignment with IFRS Standards as the starting point, applying the principles of relevance to SMEs, simplicity and faithful representation in determining whether and how that alignment should take place.

Board discussion

The Board noted that cost-benefit analysis should be included as one of the underlying principles to be considered in this project. In relation to the cost-benefit analysis, the Board would like to ensure that the focus will be on the small and medium entities that will benefit from this project because currently it looks like the focus is only on the larger side of SMEs.

The Board noted that introducing an equivalent of the investment entities exceptions in IFRS 10 may be difficult in terms of the scope assessment for PIEs in applying IFRS for SMEs. In terms of scope, the Board noted that the suggestion to consider flexibility to include early some changes to IFRS if they are considered relevant (e.g. IBOR reform) will introduce some complexity in application.

The Board voted 12 to 1 in favour of all of the staff’s recommendations.

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