Topic 3 The IFRS for SMEs Standard The IFRS for SMEs Standard is a small Standar
ID: 2342683 • Letter: T
Question
Topic 3 The IFRS for SMEs Standard The IFRS for SMEs Standard is a small Standard (approximately 250 pages) that is tailored for small companies. It focuses on the information needs of lenders, creditors and other users of SME financial statements who are interested primarily in information about cash flows, liquidity and solvency. And it takes into account the costs to SMEs and the capabilities of SMEs to prepare financial information. Discuss the relevance and applicability of the IFRS for SMEs Standard to the Pacific context and to your own respective countryExplanation / Answer
Relevance and applicability of IFRS for SMEs Standard
Small and Medium size companies are of very much importance as they constitues about 95% of the total companies In the world. IFRS for SMEs is a very great concept.
# As we all know snall companies usually runs into problem, because they dont have enough working capital or investing capital. However, with the IFRS for SMEs make a difference by reducing cost of capital by increasing the quality of financial reports.
# IFRS for SMEs will increase the ability of users to compare the accounts because in SMEs users are very close to the company and can interact with the company directly.
# Full IFRS basically introduced keeping in mind the need of large companies but eventually it also applies to small companies. However, change is required and hence IFRS for SMEs can be very helpful beacuse small companies have less complex issues, less resources.
# Also SMEs do not have any public accountability, so there is no need to waste efforts and money on preparing detailed amd irrelevant reports.
# simplified and easy understanding standards helps in creating the confidence of the management in its operations and also quality work and report with create value of the company.