GLOBAL standard setter the IASB has issued limited amendments to IFRS for SMEs after a comprehensive review identified areas where improvements could be made to the standard it introduced in 2009.
The most significant changes, which relate to transactions commonly encountered by SMEs, permit SMEs to revalue property, plant and equipment; and align the main recognition and measurement requirements for deferred income tax with IFRS.
Most of the amendments clarify existing requirements or add supporting guidance, rather than change the underlying requirements in the IFRS for SMEs. For most SMEs and users of their financial statements, the amendments are expected to improve understanding of the existing requirements, without having a significant effect on an SMEs’ financial reporting practices and financial statements.
Hans Hoogervorst (pictured), chair of the global accounting standard setter, said the standard, which was specifically developed for small and medium-sized entities, had been a “remarkable success” and is now used by millions of companies worldwide.
“The amendments are expected to improve the standard for companies and users of their financial statements. As a result we expect the adoption to spread further, improving reporting and consistency among companies without public accountability around the world,” Hoogervorst said.
IFRS for SMEs was developed in response to international demand for a global standard for small and medium-sized entities that was less complex than full IFRS.
The IASB started the initial review of the IFRS for SMEs in 2012, with the aim of considering implementation experience and assessing whether there was a need to make any amendments to the standard.
Entities reporting using the IFRS for SMEs are required to apply the amendments for annual periods beginning on or after 1 January 2017. Earlier application is permitted provided all amendments are applied at the same time.