IFRS FOR SMEs: THE IASB'S DUE PROCESS

Authors


Ronita Ram, Discipline of Accounting, University of Sydney, NSW 2006, Australia. Tel: +612 9036 7155; fax: +612 9351 6638; email: ronita.ram@sydney.edu.au

Abstract

This study explores the role of the International Accounting Standards Board's (IASB) due process in developing its International Financial Reporting Standards for Small and Medium-sized Entities (IFRS or SMEs) standard. There were tensions between the IASB's desire to minimise divergence from full IFRS and preserve recognition and measurement principles, and the primary reasons for undertaking the project – to meet the needs of users of financial statements of SMEs and to reduce the financial reporting burden on SMEs. Examination of events during the development of the project reveals much that was not apparent from material in the public domain. Most significantly, the IASB recognised that the final title of the standard, IFRS for SMEs, does not necessarily describe the scope of the standard. This paper also shows that the due process followed in the case of the IFRS for SMEs project barely reflected the ‘will of people’ but was more inclined towards acting as a communicative function for the IASB without any commitment to change its stance on the SME standard.

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