Primarily the objectives of IFRS for SMEs have been to support its accounting and financial reporting system as well as dramatically meet the basic financial requirements of these entities which does not have any public accountability and liability to publish financial statement for its external users (Laptes & Popa, 2009). Contextually, this paper critically evaluates the need of IFRS for SMEs and the challenges in adopting IFRS for SMEs.
Aims Behind Applying IFRS For SMEs
The primary aim of the IFRS for SMEs is to provide a standard for entities in nations that have no national GAAP (Generally Accepted Accounting Principles). IFRS for SMEs shall not facilitate in providing accounting framework in certain specific countries for entities that do not have necessary the resources to adopt full IFRS. Another important aim of the application of IFRS is to provide those nations which have already set-up their own national GAAP with IFRS standards, a framework that shall recognise and understand the needs of accounting framework across the territories. In general, the application of IFRS in SMEs aims at providing financial statements and other financial reporting of profit-oriented entities. Accordingly, it is aimed that with the application of IFRS in SMEs shall be directed towards satisfying the common information requirements of an array of users such as shareholders, employees, creditors, and the public at large as well as facilitating single financial standard for the preparation of financial reporting across the territories (The International Accounting Standards Committee Foundation, 2009; Madawaki, 2012). ...Show more