Amendments to IFRS for Small and Medium-sized Entities (SMEs)

The IASB has issued amendments to the IFRS for Small and Medium-sized Entities (IFRS for SMEs), after completing its first comprehensive review of the standard. The objective of the review was to consider implementation experience and developments in full IFRS since IFRS for SMEs was issued in 2009 and make amendments to the standard, if necessary, without adding complexity.

Key changes include:

  1. The alignment of accounting for income taxes and exploration assets with full IFRS;
  2. A new option to use the revaluation model for property, plant and equipment; and
  3. Some new exemptions, supporting guidance and clarification of existing requirements.

In line with the IASB’s objective of retaining simplicity, the new IFRS standards on consolidation, financial instruments, revenue, employee benefits and fair value measurement have not been incorporated into IFRS for SMEs.

The IFRS for SMEs is intended to facilitate financial reporting by small medium-sized entities that want to use international standards by providing an accounting standard suitable for them. It is a simplified and slimmed-down version of full IFRSs tailored for the needs and capabilities of small and medium-sized entities.

The IFRSs for SMEs is a separate stand-alone document organised by topic rather than corresponding to the numbering of full IFRSs. It does not contain cross references to full IFRSs; the only exception is that an entity applying the IFRS for SMEs can choose, for financial instruments, to apply either the provisions of the IFRS for SMEs or the recognition and measurement provisions of IAS 39 and the disclosure requirements of the IFRS for SMEs.

The IFRS for SMEs does not contain an effective date; instead, it will take effect from the date determined by the national regulator in each jurisdiction.

The amendments are effective for annual periods beginning on or after 1 January 2017. Early adoption is permitted, provided that all relevant amendments are applied at the same time.

For guidance related to IFRS for SMEs,  If you have any questions, contact RAAS – DPP Technical Accounting at ZA-FM DPP Accounting Queries.

David Okwara

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One Response to Amendments to IFRS for Small and Medium-sized Entities (SMEs)

  1. Kallyellisson February 18, 2016 at 8:55 am #

    Thank you for your comment Alan.Often we find that dininefg a Family Business may help in understanding how the business operates. According to the European Commission report and not basing the definition on size but how a business operates, the following is stated;A firm, of any size, is a family business, if:1.The majority of decision-making rights is in the possession of the natural person(s) who established the firm, or in the possession of the natural person(s) who has/have acquired the share capital of the firm, or in the possession of their spouses, parents, child or children’s direct heirs.2.The majority of decision-making rights are indirect or direct.3.At least one representative of the family or kin is formally involved in the governance of the firm.4.Listed companies meet the definition of family enterprise if the person who established or acquired the firm (share capital) or their families or descendants possess 25 per cent of the decision-making rights mandated by their share capital.This definition includes family firms which have not yet gone through the first generational transfer. It also covers sole proprietors and the self-employed (providing there is a legal entity which can be transferred).* First published on November 2009 in the Final Report of the Family Business Expert Group to the European Commission :OVERVIEW OF FAMILY–BUSINESS–RELEVANT ISSUES: RESEARCH, NETWORKS, POLICY MEASURES AND EXISTING STUDIES Good luck with your thesis!

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