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In September 2022, the International Accounting Standards Board (IASB) published the Exposure Draft Third edition of the IFRS for SMEs Accounting Standard as part of its second comprehensive review of the Standard.

The Exposure Draft proposes amendments to the IFRS for SMEs Accounting Standard to reflect improvements that have been made in full IFRS Accounting Standards (in the scope of the second comprehensive review) while keeping the Standard simple.

IASB® and Joint IASB-ISSB Update January 2024

The IASB met on 22 January 2024 to redeliberate the proposals in the Exposure Draft Third edition of the IFRS for SMEs Accounting Standard.

Reconciliation for liabilities arising from financing activities (Agenda Paper 30A)

The IASB tentatively decided to finalise the proposal in the Exposure Draft to require SMEs to disclose a reconciliation between the opening and closing balances in the statement of financial position for liabilities arising from financing activities.

All 14 IASB members agreed with this decision.

Agriculture: Bearer plants (Agenda Paper 30B)

The IASB tentatively decided to finalise the proposals for bearer plants in the Exposure Draft. However, the IASB tentatively decided to clarify that Section 34 Specialised Activities of the IFRS for SMEs Accounting Standard does not apply to bearer plants that can be measured separately, on initial recognition and on an ongoing basis, from the produce on them without undue cost or effort.

All 14 IASB members agreed with this decision.

Impairment of financial assets (Agenda Paper 30C)

The IASB tentatively decided that, for a small population of SMEs with significant exposure to credit risk:

  1. the relevance principle of the IASB’s alignment approach is satisfied.
    Ten of 14 IASB members agreed with this decision.
  2. the population be defined as SMEs that provide financing to customers as one of their primary businesses.
    Ten of 14 IASB members agreed with this decision.
  3. the population be required to apply an expected credit loss model.
    Eight of 14 IASB members agreed with this decision.

Given these three tentative decisions, the IASB also tentatively decided:

  1. to require SMEs that do not provide financing to customers as one of their primary businesses to continue to use the incurred loss model to measure the impairment of their financial assets.
    Twelve of 14 IASB members agreed with this decision.
  2. to require SMEs that provide financing to customers as one of their primary businesses to apply an expected credit loss model, aligned with the simplified approach in IFRS 9 Financial Instruments, to measure the impairment of their financial assets.
    Nine of 14 IASB members agreed with this decision.

Section 20 Leases and IFRS 16 Leases (Agenda Paper 30D)

The IASB tentatively decided to consider aligning the IFRS for SMEs Accounting Standard with IFRS 16 Leases at the next comprehensive review of the IFRS for SMEs Accounting Standard.

All 14 IASB members agreed with this decision.

Next milestone

IFRS for SMEs Accounting Standard