Guidance for micro-sized entities
In June 2013, the International Accounting Standards Board (the Board) issued guidance to help micro-sized entities apply the IFRS for SMEs (2009).
Over 80 jurisdictions have either adopted the IFRS for SMEs or stated a plan to do so within the next few years. In some of these jurisdictions the IFRS for SMEs is being used by very small companies with just a few employees. The Board was asked and agreed to develop guidance suitable for micro-sized entities currently applying the IFRS for SMEs and also those considering doing so in the future.
The guidance was developed with input from the SME Implementation Group. It extracts from the IFRS for SMEs only those requirements that are likely to be necessary for a typical micro-sized entity, without modifying any of the principles for recognising and measuring assets, liabilities, income and expenses. In a few areas, it also contains further guidance and illustrative examples to help a micro-sized entity to apply the principles in the IFRS for SMEs.
The guidance contains cross-references to the IFRS for SMEs for matters not covered by the guidance. Consequently, having applied the guidance, an entity’s notes to the financial statements and auditor’s report could refer to conformity with the IFRS for SMEs because this guidance does not modify the requirements of the IFRS for SMEs.
Updating the guidance
In 2015, the Board made limited amendments to the IFRS for SMEs after a comprehensive review of the Standard. The amendments are effective for annual periods beginning on or after 1 January 2017. We do not expect these amendments to have a significant effect on a micro-sized entity’s financial reporting practices and financial statements.
The Board is currently considering how best to update the guidance for micro-sized entities to reflect the 2015 amendments to the IFRS for SMEs, including considering possible improvements to the guidance. We expect to update the guidance in the second half of 2016.
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