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Support for the new IFRS for SMEs

  • IFRS for SMEs (mid blue) Image

14 Jul 2009

Presented below are excerpts from announcements made by a number of important organisations shortly after the IFRS for SMEs was issued.

The World Bank

The World Bank welcomes the publication of the International Financial Reporting Standard (IFRS) for Small and Medium-sized Entities (SMEs) by the International Accounting Standards Board.The Bank has consistently recommended simplified financial reporting requirements for SMEs in the 95 Reports on the Observance of Standards and Codes (ROSC) on Accounting and Auditing covering 86 countries that have been issued to date. The IFRS for SMEs provides a valuable financial reporting reference framework for smaller entities that is more responsive to the size and ownership of their operations, and should help improve their access to finance, said Fayezul Choudhury, Vice President, Corporate Finance & Risk Management, World Bank. In countries that have already adopted IFRS as the national accounting standard, the simplifications introduced by the SME standard will provide much needed relief.

International Federation of Accountants (IFAC)

The International Federation of Accountants (IFAC) and its Small and Medium Practices (SMP) Committee welcome the release of the International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs) by the International Accounting Standards Board (IASB). IFAC encourages its 157 member organizations to carefully consider how to use the standard in their respective jurisdictions. "This global accounting standard represents a very significant step on the path to global convergence of financial reporting practices by SMEs. It will contribute to enhancing the quality and comparability of SME financial statements around the world and assist SMEs in gaining access to finance," remarks IFAC Chief Executive Ian Ball, adding, "The beneficiaries will be not only SMEs, but also their customers, clients, and all other users of SME financial statements."

Association of Chartered Certified Accountants (ACCA)

ACCA welcomes completion of IASB's 'most important project' – The IASB's new standard for small and medium sized enterprises (SMEs) will have a significant impact on millions of companies around the world, says ACCA in welcoming the announcement. Despite concerns by many that the new simplified standard, which still runs to more than 200 pages would be too complex for small businesses to use, ACCA's own research shows little concern in this area.... ACCA President Brendan Murtagh, who is a partner in an accounting practice, said: "In my practice we imagine this will be warmly accepted as best practice by our clients very quickly. A set of standards which is more easily understood by smaller businesses, their potential investors, customers and suppliers can only help organisations to survive in these tough trading conditions and to potentially thrive when the current situation eases."

Federation of European Accountants (FEE)

FEE supports high quality, global principles-based financial reporting standards for companies since these promote consistency and transparency and help companies and their advisors to respond appropriately to new developments in business practice. In that respect FEE welcomes the IFRS for SMEs. Companies including SMEs with cross-border activities, branches and subsidiaries will experience simplification in their financial reporting by being able to use one standard and accounting framework and speak thereby one accounting language in all countries concerned.

The use of IFRS for SMEs would give National Standard Setters the possibility of no longer having to produce their own standards and keeping them up to date. This may constitute a real and tangible cost reduction at national level. FEE believes that the EC Accounting Directives should not form an impediment for Member States to allow for the use of IFRS for SMEs. To the extent they might at present be considered doing so, the current revision of these Directives provides a proper opportunity to remove any of such perceived discrepancies. The market should decide on the uptake of this standard for use in Europe.

Confederation of Asian and Pacific Accountants (CAPA)

CAPA believes that the IFRS for SMEs will greatly benefit all the small and medium-sized entities across the globe. CAPA aims to promote the IFRS for SMEs to all its member bodies by encouraging its adoption in their jurisdiction. It has always been CAPA's priority to serve the needs and issues impacting small and medium-sized entities. In one of its strategic thrusts of capacity building of the profession, CAPA has planned to conduct 'Training of Trainers' courses on IFRS for SMEs. CAPA looks forward to play an important role by coordinating efforts with IASB to assist in implementation of the IFRS for SMEs.

American Institute of Certified Public Accountants (AICPA)

"The AICPA welcomes the introduction of IFRS for small and medium entities as an alternative accounting and reporting option for private companies," said AICPA President and CEO Barry Melancon. "It is indicative of a growing trend toward alternatives for private companies in both the U.S. and worldwide, reflecting the fact that users of private company financial statements have different needs than users of public company statements."

South African Institute of Chartered Accountants (SAICA)

While many countries are expected to adopt the final IFRS for SMEs, South Africa became the first country in 2007 to adopt the Exposure Draft of the IFRS for SMEs as a Statement of Generally Accepted Accounting Practice (GAAP). The intention of the early adoption of the standard at the time was to provide immediate relief for limited interest entities under the then pending Corporate Laws Amendment Act.... The IFRS for SMEs standard will be available for immediate use when approved for issue in South Africa by the Accounting Practices Board (APB). The APB will consider this at its meeting in August.

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