What has the IASB accomplished by issuing IFRS for SMEs?
Two main reasons exist for the creation of IFRS for SMEs:
- The types and needs of users of SME financial statements are often different from the types and needs of users of public company financial statements and other entities that would likely use full IFRS. Full IFRS were designed to meet the needs of equity investors in companies in public capital markets. Users of the financial statements of SMEs don't generally have those same needs.
- Full IFRS impose a burden on SME preparers in that full IFRS contains topics and detailed implementation guidance that generally are not relevant to SMEs. This burden has been growing as IFRS have become more detailed.
As such, a significant need existed for an accounting and financial reporting standard for SMEs that would meet the needs of their financial statement users while balancing the costs and benefits from a preparer perspective. IFRS for SMEs was designed to meet that need. With the issuance of IFRS for SMEs, many SMEs around the world, will have the option of using a much simplified, IFRS-based accounting framework to prepare their financial statements.