19 IFRS for SMEs

Question 1

Full standards Vs ones for SMEs

Answer 1

• The full international standards occupy over 4,000 pages of print.
• These standards are appropriate for large companies with complex finances but are not generally suitable for smaller companies.
• The SMEs standard is tailored for use by small and medium-sized entities and (together with accompanying documents) is only 400 pages long.
• The SMEs standard is a single self-contained standard.
• Significantly fewer disclosures are required (roughly a 90% reduction).
• To further reduce the burden for SMEs, revisions are expected to be limited to once every three years.

Question 2

What percent of companies are SMEs

Answer 2

Over 95% of companies worldwide are SMEs

Question 3

What are SMEs

Answer 3

The SMEs standard defines small and medium-sized entities as entities that:
1. Do not have public accountability (its shares are not publicly traded)
2. Publish general purpose financial statements for external users

Question 4

What is the intended usage of the SME Standard

Answer 4

• The SMEs standard is intended mainly for use by unlisted companies, who are not financial institutions, which are owned by their shareholders but managed by their directors.
  o LTDs – so still quite large
  o Not owner managed businesses
• It is not intended for use by very small owner-managed businesses

Question 5

Why are SME standards needed

Answer 5

o SMEs have a different/smaller user base to larger entities
o SMEs usually have less complex transactions
o SMEs usually have less resources available to them

Question 6

Differences to Full Standards

Answer 6

Need to look at notes as many differences just need to remember a few