The International Accounting Standards Board (IASB) is considering feedback on its proposals in the Exposure Draft Third edition of the IFRS for SMEs Accounting Standard. At the January 2024 IASB meeting, the IASB discussed its proposal to introduce an expected credit loss model to account for the impairment of financial assets. The IASB tentatively decided that:
- SMEs who do not provide financing to customers as one of their primary businesses be required to continue to use the incurred loss model to measure the impairment of their financial assets.
- SMEs who provide financing to customers as one of their primary businesses be required 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.
Fieldwork is being conducted to explore the potential effects of the IASB’s tentative decision by answering these questions:
- Can preparers determine whether they provide financing to customers as one of their primary businesses, and how costly is it to make this determination?
- What would be the costs of applying an expected credit loss model (aligned with the simplified approach in IFRS 9) for SMEs that provide financing to customers as one of their primary businesses?
- Would the benefits (more timely information about expected credit losses) from an expected credit loss model to users of these SMEs’ financial statements outweigh the costs?
The results of the fieldwork will be considered by the IASB as part of its redeliberation of the proposals in the Exposure Draft.
How do I volunteer?
Accounting practitioners involved in the preparation of SMEs’ financial statements and users of SMEs’ financial statements are invited to take part in fieldwork.
Participants will be asked to complete a questionnaire and invited to discuss their responses to the questions with the SMEs project team.
The aim is for the questionnaires and follow-up calls to participants to be completed by end of April 2024.
Taking part in the fieldwork offers preparers and users of SMEs’ financial statements an opportunity to learn more about the IASB’s proposed requirements and their likely practical effects.
Participants are not required to have any prior experience in applying IFRS 9 and will not be asked to prepare financial information or disclosures in accordance with the proposed requirements.
Preparers and users who would like to participate in the fieldwork and receive a questionnaire should send an email outlining their interest to the project team using the button below.
