Beruflich Dokumente
Kultur Dokumente
Agenda
What is an SME? Key differences between IFRS for SMEs and full IFRS in the areas of:
Long-lived assets Business combinations Financial instruments Employee benefits Deferred taxation
Transition rules Key impacts and issues to consider before applying IFRS for SMEs
Page 2
The final standard was published in July 2009 Result of a five year project to address the financial reporting needs of small and medium-sized entities Aims of the project were to:
Simplify the accounting requirements Reduce the cost and effort required to produce the financial statements
Page 3
The standard consists of 35 chapters addressing all the requirements for SMEs It is a stand alone document no fall back to full IFRS (with one exception) Update process
Review after two years of financial statements have been published (may be four to five years from now) Then review every three years
Page 4
What is an SME?
Do not have public accountability, and Publish general purpose financial statements for external users
Its debt or equity instruments are traded in a public market, or It holds assets in a fiduciary capacity for a broad group of outsiders
Page 5
The definition of an SME explains which entities the standard applies to The regulatory authorities in each jurisdiction determine which entities can apply it A publicly accountable entity cannot claim to comply with IFRS for SMEs even if the are permitted or required to apply it in their jurisdiction.
Page 6
Standard sets out the concepts and basic principles underlying the financial statements of SMEs Concepts are derived from the IASB Framework Addresses issues such as:
Objective of the financial statements Qualitative characteristics of information in the financial statements General recognition and measurement requirements
Page 7
Consolidated financial statements are the primary set Complete set of financial statements is similar to that required by IAS 1 Presentation of Financial Statements
Comparative information must be provided No requirement for an opening statement of financial position
Page 8
Accounting requirements
IFRS for SMEs is based on fundamental principles of full IFRS Some of the options available under full IFRS have been eliminated Some requirements have been changed to make IFRS for SMEs simpler to apply Changes are largely for cost/benefit reasons, not conceptual reasons
Page 9
Long-term assets
Measured at cost less accumulated depreciation and impairment losses Revaluation option removed Measured at fair value Must all be expensed Must be recognised in profit or loss at fair value, when performance conditions are met
Investment properties
Borrowing costs
Government grants
Page 10
Intangible assets
Intangible assets
Measured at cost less accumulated amortisation and impairment losses All internally generated intangibles are expensed Finite useful life 10 years if cant reliably estimate Amortised over useful economic life Finite useful life 10 years if cant reliably estimate No compulsory annual impairment test indicator approach
Goodwill
Page 11
Group accounts
If parent is a subsidiary and the ultimate parent produces financial statements compliant with IFRS/IFRS for SMEs If have only one subsidiary acquired with the intention of disposal within one year
Business combinations acquisition costs are capitalised Associates and jointly controlled entities
Consolidated accounts - measured using the cost model, equity accounting or at fair value Separate financial statements measured using the cost model or at fair value
Page 12
Financial instruments
Apply requirements of IFRS for SMEs, or Apply the recognition and measurement provisions of IAS 39
Two categories of financial instrument: basic and other financial instruments Basic FI measured at amortised cost using effective interest rate method Other FI measured at fair value, all changes recognised in profit or loss Simplified derecognition rules No separate accounting for embedded derivatives
Page 13
Financial instruments
Interest rate risk of a debt instrument measured at amortised cost Foreign exchange or interest rate risk in a firm commitment or highly probable forecast transaction Price risk of a commodity that it holds or in a firm commitment or highly probable forecast transaction to purchase or sell a commodity Foreign exchange risk in a net investment in a foreign operation
Page 14
Employee benefits
Projected unit credit method not required if undue cost or effort Actuarial gains and losses are recognised in full, either through profit or loss or through other comprehensive income Past service costs are recognised in profit or loss as incurred Directors judgement used to measure fair value of shares in equity-settled schemes in certain circumstances Schemes that give choice of equity or cash settlement are usually accounted for as cash-settled Guidance on accounting for group plans reduced
Share-based payments
Page 15
Income taxes
Uses an approach similar to the exposure draft on Income Tax Number of differences to IAS 12 including:
Definition of tax basis Recognition of deferred tax assets Uncertain tax positions Disclosures
Page 16
Transition
Transition rules are based on IFRS 1, with some simplifications Rules apply to all entities whether they have previously applied full IFRS or a different GAAP Rules can only be applied by an entity once Adjustments to the opening balance sheet are not required if impracticable Disclosure requirements are similar to IFRS 1
Page 17
Legislative/regulatory requirements in their jurisdiction System changes may be required Impact on financial statement processes Adoption of full IFRS at a later date will require IFRS 1 transition Significant judgment may be required to determine undue cost or effort and impracticable.
Page 18