Small and medium sized entities
Small and medium sized entities are entities that do not have public accountability. This can be either unlisted entities or a non-financial institution.
IFRSs for Small and Medium-sized entities
The IFRS for SMEs is a self-contained Standard (less than 250 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.
Compared with full IFRS (and many national GAAPs), the IFRS for SMEs is less complex in a number of ways:
Topics not relevant for SMEs are omitted; for example earnings per share, interim financial reporting and segment reporting.
Many principles for recognising and measuring assets, liabilities, income and expenses in full IFRS are simplified. For example, amortise goodwill; recognise all borrowing and development costs as expenses; cost model for associates and jointly-controlled entities; and undue cost or effort exemptions for specific requirements.
Significantly fewer disclosures are required (roughly a 90 per cent reduction).
The Standard has been written in clear, easily translatable language.
To further reduce the burden for SMEs, revisions are expected to be limited to once every three years.
Relevant examiner articles on the ACCA (students) website:
IFRS for SMEs