The IFRS for SMEs is a self-contained standard of 230 pages, designed to meet the needs and capabilities of small and medium-sized entities (SMEs), which are estimated to account for over 95 per cent of all companies around the world.
Topics not relevant for SMEs are omitted. Examples: earnings per share, interim financial reporting, and segment reporting. Where full IFRSs allow accounting policy choices, the IFRS for SMEs allows only the easier option. Examples: no option to revalue property, equipment, or intangibles; a cost-depreciation model for investment property unless fair value is readily available without undue cost or effort; no ‘corridor approach’ for actuarial gains and losses. Many principles for recognising and measuring assets, liabilities, income and expenses in full IFRSs are simplified. For example, amortise goodwill; expense all borrowing and R&D costs; cost model for associates and jointly-controlled entities; no available-for-sale or held-to-maturity classes of financial assets. Significantly fewer disclosures are required (roughly 300 versus 3,000).
ADRIANA ALVARADO
Hi Adriana,
ResponderEliminarIFRS is the appropriate application to ensure that financial statements provide information about the financial position, performance and cash flows of an entity that is useful for different users in making economic decisions.
In order to expand the effect of this benefit to users of financial information from a very good firms, the IASB has also issued a separate rule that seeks its application to the financial statements of general purpose entities that many countries are known as small and medium-sized entities (SMEs). The IASB has called this statement under the name: International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs).
I think that with this separate rule for Pymes, the most important fact is that topics that are not relevant for were omitted in order to reduce the burden for SMEs.
Best Regards!