On July 9, the International Accounting Standards Board (IASB) issued an International Financial Reporting Standard (IFRS) designed for use by small and medium-sized entities (SMEs), which are estimated to represent more than 95 per cent of all companies.

IASB describes the IFRS for SMEs as a self-contained standard tailored for the needs and capabilities of smaller businesses.  Many of the principles in full IFRSs for recognizing and measuring assets, liabilities, income and expenses have been simplified, topics not relevant to SMEs have been omitted, and the number of required disclosures has been significantly reduced.  To further reduce the reporting burden for SMEs revisions to the IFRS will be limited to once every three years.

IASB said the IFRS for SMEs responds to strong international demand from both developed and emerging economies for a common set of accounting standards for smaller and medium-sized businesses that is much simpler than full IFRSs.  The IFRS for SMEs also provides a platform for growing businesses that are preparing to enter public capital markets, where application of full IFRSs is required.

The IFRS for SMEs is effective immediately on issue.  IASB left it up to each jurisdiction to determine which entities should use the standard.  IFRS for SMEs (together with the basis for conclusions, illustrative financial statements, and a presentation and disclosure checklist) can be downloaded free of charge from http://go.iasb.org/IFRSforSMEs.