Got a tricky question? Receive an answer from students like you! Try us!

The Impact of IFRS for SMEs on UK companies - Essay Example

Ph.D.
Essay
Finance & Accounting
Pages 4 (1004 words)
Download 1

Summary

The impact of IFRS for SMEs on UK companies Introduction Background of the study Large and small and medium enterprises (SMEs) vary in size because of their nature and coverage of business. SMEs are defined as non-public entities that are capable of publishing general purpose financial statements for external users (Organization for Economic Co-operation Development, 2008)…

Extract of sample
The Impact of IFRS for SMEs on UK companies

All of these entities have the option to adopt corresponding accounting tiered reporting framework under a certain purpose (Baker and Wallage, 2000). For instance in the United Kingdom (UK), publicly accountable entities are required to adopt full international financial reporting standard (IFRS) while those non-publicly accountable entities are required to use IFRS for SMEs. On the other hand, small companies are required to adopt financial reporting standard for smaller entities (FRSSE). However, these different entities have the option to adopt whatever reporting framework they need or most suited to their individual system (Jermakowicz et al., 2006). For instance, in the UK, small companies may have the opportunity to either apply full IFRS or IFRS for SMEs. Small company is defined as having less 250 employees and there are 571 listed of them in the UK in 2010 (Andrews, 2010). Financial reporting standards such as IFRS are designed especially in advanced economies (Tyrrall et al., 2007). In line with this, there is a strong link between economic system and financial reporting standards. In the UK, it is without question that organisations may eventually adopt it due to complexity of their business operations. ...
Download paper
Not exactly what you need?

Related Essays

Policy Choices under IFRS in UK and German Context
Nobes (2006) studied this area of research and outlined 16 policy choices that are mostly available to the companies. The four choices have been eliminated from this analysis as some of them are industry specific and some of them are commonly used by every company no matter in which industry they operate. The rest of twelve policy choices do have some issues with them as some organizations do not disclose their policies at times. The most common examples are of “investment property” and “inventory” such that in relation to investment property, organizations do not disclose whether…
10 pages (2510 words)
IFRS 3 Business Combinations and IAS 38 Intangible Assets govern how companies should account for and disclose their goodwill an
For instance, all payments made to acquire a business must be recorded at fair value at the date of acquisition. And the contingent payments need to be classified as ‘debt’ which is measured sequentially through the income statement. All costs pertaining to acquisitions are expensed. IAS 38 This standard prescribes accounting policies for treating intangible assets that are not supervised in particular by any other standard. A firm can only recognize an intangible asset if it meets some specific standard requirements. This standard also guides in measuring the amount at which to report the…
4 pages (1004 words)
The IFRS for SME's
In the fast-evolving business environment brought about by the recent advances in information and communication technologies, transportation, and others, conducting business have also changed. Requirements and understandings need to be ready, clear, and acceptable for all of those conducting business due to various factors such as internet connectivity that allows transfer of funds from one point of the globe to another in a matter of seconds, purchase and sales of high-end to low-end products at the click of the mouse, and the various automations that have increased organizational…
10 pages (2510 words)
Critically assess the extent of the benefits of adopting international financial reporting standards in lieu of a country's dome
However, intense training is needed by the employees while implementing IFRS which in turn increases the cost in the financial recording process. Therefore, the adoption of IFRS over the already applied financial standards in the national context is quite likely to give rise to a few noteworthy challenges besides its advantages. Table of Contents Abstract 2 1.Introduction 4 2.Creation of International Financial Reporting Standards 5 2.1 IFRS in Political Environment in UK 8 2.2 Controversies Related to the Adoption of IFRS in UK 9 2.3 Advantages of Converting Into IFRS 10 2.4 Requirements to…
20 pages (5020 words)
IFRS
The reason for opting for gradual convergence instead of adoption is that the local accounting body may want to become involved in the standard setting process. If IFRS is adopted fully then we will just have to accept what a few people have decided for us. I think we should be involved in decisions that affect us, and other countries have taken a similar approach. In fact, Ramanna and Sletten (2009) indicates that there is evidence to suggests that the more powerful countries like the US are not willing to surrender their authority to set accounting standards to an international body.…
4 pages (1004 words)
The need of IFRS and the Problem of adopting it for UK Small and Medium Enterprises
It is tough to bring such a radical change in operational as well as financial aspects for these SME. These radical changes are not without their associated dangers and risks. This research paper tries to elucidate the benefits and the problems of adopting IFRS for SME and provides suggestion of adopting a middle path between benefit and associated risk. Table of Contents Table of Contents 3 CHAPTER I – INTRODUCTION 6 1.1 Background 6 1.2 Research Objective 7 1.3 Research Problem 7 1.5 Research Questions 8 CHAPTER II – LITERATURE REVIEW 9 2.1 Introduction 9 2.2 Theoretical Framework 9…
24 pages (6024 words)
High Profile corporate collapses in the last two decades have been attributed to laxities in the regulatory framework of financi
In June 2002, the EU has adopted a regulation to prepare their financial statements in agreement with IFRS or IAS which is required to be followed by all listed European Union companies in the regulated markets. Companies are open to select their national reporting standards and follow Generally Accepted Accounting Principles (GAAP) for associate and subsidiary companies. The regulation is applicable only on the consolidated accounts. The regulation came into consideration from the year 2005 (PwC, 2005). With an aim to develop common accounting standards in 1973, nine countries including UK…
10 pages (2510 words)