Understanding IFRS for SMEs Adoption

International Financial Reporting Standards, usually called IFRSs are accounting standards developed and promoted by the IFRS Foundation and the International Accounting Standards Board (IASB) to provide a common global language for business affairs so that company financial statements are understandable and comparable across international boundaries.

Full IFRS is aimed primarily at public-traded entities however there are far more companies with no public accountability than publicly-traded ones. The IFRS for SMEs was therefore developed for companies with no public accountability, which needs to prepare financial statements. At the time of writing, the IFRS for SMEs is currently used in over 70 countries.

In this article, we will specifically consider the IFRS for SMEs, which is an internationally-recognised framework for the preparation of financial statements by companies with no public accountability. IFRS for SMEs framework was originally published in 2009 by IASB. It is aimed at the needs of private companies. It is intended to ensure that lenders, investors and other stakeholders receive high quality financial information to help them make lending and other decisions. A cost-benefit approach was taken in developing the IFRS for SMEs, with the emphasis on easing the financial reporting burden on companies with no public accountability.

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