Developing Countries' Views on Financial Reporting Standards for Small and Medium-Scale Enterprises (SMEs): The Case of Ghana

Posted: 23 Nov 2008

Date Written: November, 21 2008


There have been calls for different reporting standards for big firms and small firms over the years due to unique attributes and challenges of SMEs especially in the area of financial reporting as well as the increasingly significant roles they play in the economies of most countries. Thus, it is argued that, SMEs need a financial accounting and reporting framework which would: be simple, understandable and user-friendly; produce useful management information; be as standardized as possible; be flexible enough to accommodate the growth of business and increase the potential of some SMEs as they expand to use international accounting standards (IAS); be easily reconcilable for taxation purposes; and recognize the environment in which SMEs operate (e.g. UNCTAD's 18th Session, 2001).

However, the IASB exposure draft on IFRS for SMEs and some discussion papers on this subject have been criticized for focusing on entities that are not defined as SMEs in developing nations' terms, but are instead more aligned to the US definition of an SME as well as not taking into account the uniqueness and challenges of SMEs in developing countries.

Therefore, this study seeks to examine the views of the stakeholders who have direct or indirect association with the financial reporting of SMEs in Ghana, a developing country. It also assesses the suitability of current reporting standards for SMEs in Ghana.

Results show that, there is lack of uniformity in the application of reporting standards by SMEs and the general level of compliance is low, citing problems such as lack of skilled accounting personnel, high cost in applying standards and low levels of awareness of existing standards. Besides, the level of awareness on IFRSSE which SMEs in Ghana must be compliant by the year 2009 is very low.

Keywords: SMEs, Differential Reporting, Ghana

JEL Classification: M41, M44, M47

Suggested Citation

Simpson, Samuel Nana Yaw, Developing Countries' Views on Financial Reporting Standards for Small and Medium-Scale Enterprises (SMEs): The Case of Ghana (November, 21 2008). Available at SSRN:

Samuel Nana Yaw Simpson (Contact Author)

University of Ghana - Business School ( email )

P.O. Box LG 78
Accra, Greater Accra LG 78

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