The IFRS for SMEs Update is a staff summary of news, events and other information about the IFRS for SMEs® Standard and related SME activities. The staff summary has not been reviewed by the International Accounting Standards Board (IASB).
This edition of the IFRS for SMEs Update includes:
The SMEIG is expected to meet:
The IFRS Foundation provides educational materials to support the implementation and application of the IFRS for SMEs Standard. These materials are available on the Supporting materials for the IFRS for SMEs Standard page and include:
The IFRS Foundation has also made available a package of 35 supporting modules to help those who wish to learn more about the IFRS for SMEs Standard, particularly those who apply the Standard and users of financial statements that are prepared in accordance with the Standard.
Ayodele Ojo is a Finance Manager at Lotus Capital Limited, Nigeria.
The Financial Reporting Council (FRC) of Nigeria is statutorily responsible for, among other things, developing and publishing the accounting and financial reporting standards to be observed in the preparation of financial statements of public entities in Nigeria and for related matters.
On the Road map to the adoption of IFRS Standards, the FRC required all small and medium-sized entities in Nigeria to apply the IFRS for SMEs Standard when preparing their financial statements for the year ended 31 December 2014.
It is disappointing to note that despite the IFRS for SMEs Standard being simple, more relevant as well as less costly to apply, not many entities apply the IFRS for SMEs Standard in Nigeria in the preparation of their financial statements. The reason being attributed to the lack of awareness of the possible benefits of applying of the Standard.
The IASB recently consulted on the approach to take in updating the IFRS for SMEs Standard to reflect developments in the requirements of full IFRS Standards.
In January 2020, the IASB published a Request for Information on the Second Comprehensive Review of the IFRS for SMEs Standard discussing the alignment approach, which is to continue to develop the IFRS for SMEs Standard based on the principles of IFRS Standards.
In addition to the usual means of providing feedback, such as comment letters and outreach meetings, the IASB gave the possibility to users of SMEs’ financial statements to provide feedback using an online survey (user survey) and additional interviews were carried out with users of SMEs’ financial statements. The Request for Information was open for comment for 270 days. During this period, the IASB received 54 completed user surveys from America, Asia-Oceania, Europe and Africa. Africa accounted for only 10% of the responses.
The feedback obtained on the alignment approach showed divergent views on whether the IFRS for SMEs Standard should be aligned with full IFRS Standards. Supporters of the alignment approach said alignment would ease an entity’s transition to full IFRS Standards when the entity is ready to apply full IFRS Standards. Respondents who disagreed with the alignment approach were concerned about introducing complexity to the Standard, which could place unnecessary pressure on SMEs’ resources.
Overall, the feedback showed that the majority of the stakeholders favoured continuing to align the IFRS for SMEs Standard with full IFRS Standards.
In February 2021 and September 2021, the SMEIG—which supports the global adoption of the IFRS for SMEs Standard and its maintenance—held virtual meetings to discuss the feedback on the Request for Information and make recommendations to the IASB for updating the IFRS for SMEs Standard.
In the light of the feedback and the recommendations from SMEIG members, the IASB agreed:
The IASB has started discussing specific sections of the IFRS for SMEs Standard that could be aligned with new requirements in IFRS Standards in the scope of the second comprehensive review, such as new requirements for financial instruments, revenue and leases.