The International Accounting Standards Board introduced update proposals for the IFRS for SMEs accounting standard Thursday, to reflect recent improvements in International Financial Reporting Standards for small and medium-sized entities.
The IASB's proposals include updating the current standard principles to align with those of the Conceptual Framework for Financial Reporting issued in 2018, which aimed to set out financial reporting fundamental concepts to support the board in developing IFRS. The framework's role is to provide accurate information to investors, lenders and creditors while implementing a standard precedent, so similar transactions are always treated the same way. The new standards are also set to follow simplified requirements based on IFRS 13 Fair Value Measurement and IFRS 15 Revenue from Contracts with Customers. IFRS for SMEs provides a streamlined set of standards that small and midsized private companies can use without dealing with the complex rules required of publicly traded companies.
IASB and IFRS Foundation headquarters in London
Courtesy of IFRS Foundation
"The IFRS for SMEs Accounting Standard was developed from the principles and requirements in full IFRS Accounting Standards, but simplified by taking into account different user needs and by reducing cost and complexity for preparers,"said IASB chair Andreas Barckow in a statement. "The IASB has proposed these amendments to the Standard to reflect some new requirements of full IFRS Accounting Standards that the IASB believes to be beneficial for users of SMEs' financial statements too, but that has been adapted and simplified to be more cost-effective."
In 2020, the IASB started its second comprehensive review of the standard and released a request for information, under the advice of the IASB's SME Implementation Group. To decide whether and how the IASB should propose amendments to the standard, stakeholders provided feedback on amending the framework.
"The IFRS for SMEs accounting standard has always been about keeping accounting requirements as simple as possible and cost-effective for eligible companies," said Barckow in a statement. "These proposed updates respond to the feedback on how to keep the standard current while maintaining its simplicity."
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