Background

In September 2022, the International Accounting Standards Board (IASB) published the exposure draft of a third edition of the IFRS for SMEs accounting standard. For this exposure draft, the IASB had considered alignment with full IFRS Accounting Standards that are effective on or before 1 January 2020. Nevertheless, during the redeliberation of the proposals in the exposure draft, the IASB also looked at all amendments to full IFRSs with an effective date after 1 January 2020 to see whether any of these would warrant inclusion in the final amendments.

At its meeting in October 2023, the IASB decided to include the amendments to full IFRSs for supplier finance arrangements and lack of exchangeability. As these amendments had not been part of the original exposure draft and as the IASB wanted the public to be able to comment on these amendments before including them in the third edition of the IFRS for SMEs, the IASB decided to develop an addendum to the original exposure draft that would be exposed for public comment prior to finalising the amendments.

Suggested changes

The proposed amendments in exposure draft IASB/ED/2024/2 Addendum to the Exposure Draft 'Third edition of the IFRS for SMEs Accounting Standard' are:

Alignment with IAS 7 as amended by Supplier Finance Arrangements

The IASB proposes that an SME would disclose the following information about its supplier finance arrangements:

• the terms and conditions - aggregated, but with separate disclosure of the terms and conditions of supplier finance arrangements that are dissimilar;
• at the beginning and end of the reporting period for reportable supplier finance arrangements:
  • the carrying amounts of the financial liabilities and where they are included in the statement of financial position,
  • the carrying amounts of the financial liabilities for which suppliers have already received payment from the finance providers; and
  • the range of payment due dates of the financial liabilities compared to trade payables that are not part of a supplier finance arrangement; and
• the type and effect of non-cash changes in the carrying amounts of the financial liabilities.

Alignment with with IAS 21 as amended by Lack of Exchangeability

The IASB proposes to amend the IFRS for SMEs:

• to specify when a currency is exchangeable into another currency;
• to set out the factors an SME would need to consider when assessing whether a currency is exchangeable and to specify how those factors affect the assessment;
• to specify how an SME determines the spot exchange rate when a currency is not exchangeable into another currency; and
• to require an SME to disclose information that would enable users of its financial statements to understand the effects of a lack of exchangeability.

Comments on the proposed changes are requested by 31 July 2024.

Effective date

The IASB proposes that the amendments have the same effective date as the other amendments to the IFRS for SMEs. 

Additional information

Please click for:

• IASB press release
• Access to the exposure draft on the IFRS Foundation website
• Our iGAAP in Focus newsletter explaining the proposed amendments
• Our IAS Plus project page for the Second comprehensive review of the IFRS for SMEs