Практика МСФЗ 23 березня, 2020

IFRS for SMEs: «іs this IFRS-lite; or is it a separate standard»?

Given the growing interest of medium-sized Ukrainian businesses in implementing IFRS for SMEs, we have asked  some comments from Bruce Mackenzie. Bruce Mackenzie, a member of the IFRS Interpretation Committee, a partner of W Consulting International, one of the authors of the reputable Wiley Handbook «Applying IFRS for SMEs».



Bruce Mackenzie, IFRS IC member, a partner of W Consulting International


EEG members recently commented on the alignment of the IFRS for SMEs Standard with specific IFRS Standards, saying IFRS 16 Leases is complex to apply. Whether leasing accounting under IFRS 16 algorithms is critical for SMEs?

B. M.: The main issue facing the IASB is whether or not to align IFRS for SMEs with full IFRS.  This will drive the direction they will take when revising the standard.  If the IASB’s view is that the SME standard is a full IFRS – light, then they have no choice but to align it with all the principles in the new standards (IFRS 9, 15, 16, etc).  Whereas if the IASB decides that the SME standard is a separate stand-alone framework which is not dependent on the principles in full IFRS, then they have the freedom to make changes. 

Once they have decided which approach to take, then they need to debate the principles in each of the amendments to see if they are consistent with what they want to achieve with the SME standard.  One of the problems with a standard such as leasing, is that the basic principle in the standard is that a lease creates a liability - All the accounting in IFRS 16 follows from that. A decision not to adopt that standard means that the IASB must believe that the above principle does not apply to an SME. I think this could be difficult.

What do you think, if IASB excluded the category of other  comprehensive income from IFRS for SMEs, would it promote recognition the standard in the EU?

B. M.:  I don’t believe the issue around adoption is purely the other comprehensive income category (OCI).  There are many areas where some jurisdictions believe the accounting is not appropriate.  If you look at the UK equivalent (FRS) for non-listed companies, there are many areas where the UK elected to adopt a different approach for SMEs.  I believe that most jurisdictions will keep their national standards for SMEs unless required by law to adopt the SME standard.

Many accountants believe that the IFRS for SMEs would be very attractive if IFRS 1 included special simplifications for the transition from IFRS for SMEs to IFRS. What do you think about it?

B. M.:  As discussed above, this question depends on whether the Board believes the IFRS for SMEs should be an easier version of full IFRS.  If this was the case, then it would make transition easier.  If the IASB takes the view that the SME standard is completely separate and stand alone, then the transition to full IFRS should not be a factor in deciding on any of the issues they may discuss around the SME standard.  It all starts with the fundamental principle – is this IFRS-lite; or is it a separate standard.

№ 3, 2020  (с. 12)
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