SAICA Creates Guidance for Micro Organizations

In their bid to minimize the burden of financial reporting being faced by micro organizations, the SAICA has designed a guide that will help small as well as medium organizations apply IFRS to micro organizations. The guidance created by South African Institute of Chartered Accountants (SAICA) hasn’t changed the International Financial Reporting Standards for small and medium enterprises, neither has it deleted any of the sections of the reporting standard, which cannot be applied to a micro organization. The all new guide from SAICA has been issued in the form an electronic gear that is easy to use. This guide basically consists of a user checklist, financial statements consisting of illustrations, disclosure checklist and a guide that consists of applications that have been illustrated with practical examples.

South Africa as a nation was first to take up and follow the Exposure Draft on the International Financial Reporting Standards for small and medium enterprises so that it could be used by local entities, when International Accounting Standards Board had issued it in the year 2007. The only reason why the country chose to adopt the draft was because it intended to offer instant relief to SMEs. However, the new guidance has been designed with an intention to simplify and minimize the cost associated with preparing finance related statements for micro organizations further.

The international Accounting Standards Board had recently clarified that it would design a guidance that is apt for micro organizations that are using International Financial Reporting Standards for small and medium enterprises. The guidance will be created on the basis of those needs and without altering the principles for measuring and recognizing liabilities, assets, expenses and income.

Minimizing the burden of financial reporting of micro organizations is an issue that has been raised by entities across the world, irrespective of the fact whether the IFRS application for small and medium enterprises would not be permitted, allowed or made mandatory. In the month of December in 2011, the parliament in Europe had given votes in order to minimize the burden associated with financial reporting for micro organizations by permitting Member States to simplify the process that micro organizations use for preparing their financial accounts.