(IFRS) for Small and Medium-sized Entities (SMEs)

IFRS FOR SMES – JULY 2009P12Tax laws are specific to each jurisdiction, and the objectives of general purposefinancial reports differ from the objectives of reporting taxable profit.Thus, financial statements prepared in conformity with the IFRS for SMEs areunlikely to comply fully with all of the measurements required by a jurisdiction’stax laws and regulations. A jurisdiction may be able to lessen the ‘dual reportingburden’ on SMEs by structuring tax reports as reconciliations from the profit orloss determined in accordance with the IFRS for SMEs and by other means.Authority of the IFRS for SMEsP13Decisions on which entities are required or permitted to use the IASB’sstandards rest with legislative and regulatory authorities and standard-settersin individual jurisdictions. This is true for full IFRSs and for the IFRS for SMEs.However, a clear definition of the class of entity for which the IFRS for SMEs isintended—as set out in Section 1 of the IFRS—is essential so that (a) the IASB candecide on the accounting and disclosure requirements that are appropriate forthat class of entity and (b) the legislative and regulatory authorities,standard-setters, and reporting entities and their auditors will be informed ofthe intended scope of applicability of the IFRS for SMEs. A clear definition is alsoessential so that entities that are not small or medium-sized entities, andtherefore are not eligible to use the IFRS for SMEs, do not assert that they are incompliance with it (see paragraph 1.5).Organisation of the IFRS for SMEsP14P15The IFRS for SMEs is organised by topic, with each topic presented in a separatenumbered section. Cross-references to paragraphs are identified by sectionnumber followed by paragraph number. Paragraph numbers are in the formxx.yy, where xx is the section number and yy is the sequential paragraph numberwithin that section. In examples that include monetary amounts, the measuringunit is Currency Units (abbreviated as CU).All of the paragraphs in the IFRS have equal authority. Some sections includeappendices of implementation guidance that are not part of the IFRS but, rather,are guidance for applying it.Maintenance of the IFRS for SMEsP16P17The IASB expects to undertake a thorough review of SMEs’ experience in applyingthe IFRS for SMEs when two years of financial statements using the IFRS have beenpublished by a broad range of entities. The IASB expects to propose amendmentsto address implementation issues identified in that review. It will also considernew and amended IFRSs that have been adopted since the IFRS was issued.After that initial implementation review, the IASB expects to proposeamendments to the IFRS for SMEs by publishing an omnibus exposure draftapproximately once every three years. In developing those exposure drafts, itexpects to consider new and amended IFRSs that have been adopted in theprevious three years as well as specific issues that have been brought to its8 © IASCF