An Exposure Draft has Been Issued by IASB on Proposed Amendments to IFRS or SMEs
The International Accounting Standards Board has recently issued an Exposure Draft for proposed changes to the "International Financial Reporting Standard for Small and Medium Sized Entities". The IASB has recommended some small changes in 21 of the 35 sections of IFRS for SMEs.
The International Financial Reporting Standard for Small and Medium Sized Entities (IFRS for SMEs) was issued in July 2009. It was meant to bring simplifications in the requirements of current IFRSs for meeting the need of users of financial statements of SMEs and to account for cost-benefit considerations. Its requirements are less robust than the normal IFRSs, less complex, reduced disclosures, and reduced policy choices.
When the IFRS for SMEs was issued, IASB stated its intent to review it after every three years. Therefore it review was commenced in 2012. Feedback from the constituents and stakeholders were gathered and the Board reviewed the feedback and decided not to make a major overhaul. The Board suggested only some small amendments in it.
The majority of the suggested amendments in the IFRS for SMEs concern clarification of the current text. Therefore, the changes will not change the way the organizations are accounting their transactions. Some of the proposed changes include:
- clarification of definition of SME with regard to publicly accountability included
- Included guidance on "Undue cost and effort" exemption with regard to concepts and pervasive principles
- Relief from requirement to disclose comparative information suggested
- Clarification regarding discontinued operations included
- Changes made to align it with the changes in IAS 1
- Definition of "Combined financial statements" amended, and clarification and guidance included for dealing with different reporting dates
- Clarification added regarding requirements to measure the investment in equity instruments at FV
- Amendments to align with the changes in the IAS 16 regarding classification of spare parts, stand-by and servicing equipment
- Clarification about what arrangements cannot be classified as leases
· Scope of foreign currency transactions clarified
- Definition of "related party" aligned to IAS 24
- Some definitions amended and 5 new terms added to the glossary