To What Extent Would the Proposed IFRS for Small and Medium-Sized Entities ('IFRS for SMEs') be Independent of the Full IFRS System?

22 Pages Posted: 23 Jul 2007

See all articles by Alexander Schiebel

Alexander Schiebel

Vienna University of Economics and Business Administration

Date Written: December 6, 2006

Abstract

In its proposed IFRS for Small and Medium-sized Entities (February 2007), the International Accounting Standards Board (IASB) proposes that entities without public accountability, which the IASB calls small and medium-sized entities (SMEs) should be accounted for differently to publicly accountable entities (stock exchange listed companies and entities managing assets in a fiduciary capacity for a broad range of outsiders). External users of the financial statements of SMEs are said to have different information needs. To the extent that the information needs of external users of financial tatements are different depending on whether entities are publicly accountable or not, the regulations governing international financial reporting should also be different. Global financial reporting standards for SMEs would make comparison across borders possible. The IASB's objective is an independent IFRS for SMEs. Therefore the draft standard's dependence, among other things, on the full IFRS system affects the quality of the differential financial reporting model. The aim of this paper is to analyse the extent to which the draft standard is dependent on the full IFRS system. Recommendations to avoid any dependence are presented. No attempt is made in this paper to analyse the different information needs suggested by the IASB or the IASB's stated objective of an independent reporting standard for SMEs.

Keywords: SME, IFRS, IASB, differential financial reporting, independence, small, medium, unlisted, financial instruments

JEL Classification: M41

Suggested Citation

Schiebel, Alexander, To What Extent Would the Proposed IFRS for Small and Medium-Sized Entities ('IFRS for SMEs') be Independent of the Full IFRS System? (December 6, 2006). Available at SSRN: https://ssrn.com/abstract=993006 or http://dx.doi.org/10.2139/ssrn.993006

Alexander Schiebel (Contact Author)

Vienna University of Economics and Business Administration ( email )

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0043 1 31336 4606 (Phone)
0043 1 31336 718 (Fax)

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