Introduction

In July 2009, IAFB released IFRS for SMEs after a five year development process involving extensive consultation worldwide. IFRS for SMEs is a self-contained standard of about 230 pages, tailored for the needs and capabilities of smaller business. A number of full IFRS principles for recognizing and measuring the assets, liabilities, income and expenses have been simplified. Topics not related SMEs have been omitted, and number of requirement disclosures has been significantly reduced. For instance, under IFRS for SMEs, goodwill is amortized and only tested for impairment when there is triggering event, instead of being subject to a full impairment test each year. In addition, development costs are expensed under IFRS for SMEs while they are capitalised under full IFRS. Other key simplification can be found in these sections on financial instruments, defined benefit obligation, interest capitalization and cash flow presentation.

Objective
To know how it will develop a global standards for SMEs. To know how it will be useful if the IFRS for SMEs prepared for use of lenders, vendors and other creditors, outside investors, credit rating agencies, and other external parties. The resulting financial Statements are likely to be Useful for preparing tax returns or determining distributable Income only after adjustments to reflect local laws. To examine what problems they might face if a financial statement should reflect true and fair view of the business affairs of the organization. As these statements are used by various constituents of the society / regulators.

Need of study

In preparation for IPOs:

Growing companies that are considering listing their shares on overseas stock exchanges might want to consider applying IFRS for SMEs as an intermediate step that will facilitate the implementation of Full IFRS when it is required to be applied for the purposes of the IPO.

Simplification:
The IFRS for SMEs is a self-contained standard of about 230 pages tailored to the needs and capabilities of smaller businesses. Significant simplifications have been pervasively introduced throughout all areas of IFRS recognition, measurement, derecognising and disclosures. In addition, some topics in Full IFRS, not relevant to SMEs have been omitted.

Opportunities related to the one-off exemptions offered by IFRS:

SMEs moving to IFRS for SMEs will have the ability to use the exemptions granted by IFRS, First time adoption of IFRS. For example, SMEs will be able to use the fair value as initial deemed cost for Property, Plant and Equipment where there are outdated values being used under the depreciated cost method under previous GAAP. Once the initial cost based on fair value has been determined, SMEs are allowed to use the cost method as the basis for subsequent measurement.

Methodology

Primary data: To analyse the research study, the data collected from various from charted accountants. Secondary data: The data is collected from journals and internet.