Deloitte reply to IASB's SME questionnaire

  • Deloitte Comment Letter Image

06 Jul 2005

Deloitte has submitted a response to the IASB's Staff Questionnaire on Possible Recognition and Measurement Modifications for Small and Medium-sized Entities (SMEs).

We continue to support the IASB's efforts to develop an appropriate and comprehensive reporting regime for SMEs. We make a number of recommendations for recognition and measurement simplifications for SMEs, and we request clarification of several aspects of the Board's approach to SME standards, including the definition of SMEs. Overall, we conclude:

We believe it is very important that the Board develops a set of financial reporting standards for SMEs as soon as possible. Many jurisdictions around the world currently have differential reporting regimes. Full IFRS, with their focus on providing information for making economic decisions in the context of developed capital markets, may not be suitable for SMEs simply because they are not designed to meet the needs of this particular sector. In our experience, users of SMEs' financial statements are looking for standards which result in financial reporting which is likely to be meaningful and comprehensible to them. Standards that provide the least cumbersome method of achieving the accounting treatment and/or disclosure that is not complex are sought. Standards are wanted that provide guidance that is widely relevant to the transactions of SMEs and that are written in terms that can be understood by such businesses. We hope that the outcome of this project will be a simplified accounting regime which provides entities with a means of communicating financial information to their stakeholders in a manner appropriate to that entity's nature.

In our comment letter we have detailed a number of accounting choices which we believe should be left open for SMEs. We note that where an SME chooses a particular accounting model, that decision ought to be treated as an accounting policy choice and applied consistently by that SME in respect of all similar transactions.

Click to (PDF 82k). All of Deloitte's past comment letters to the IASB and the IASC may be found Here.

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