QUESTION 1
In February 2007, the International Accounting Standing Board ( IASB) published for comment an exposure draft of a proposed International Financial Reporting Standard (IFRS) for small and Medium Enterprises( SMEs).
Required:
Outline three benefits that SMEs will derive from adopting IFRS.
- Improved access to capital.
- Improved quality and comparability or reporting.
- Facilitates cross-border trading.
- Focus on the needs of users of SME financial statement.
- Audit efficiencies.
- Stability – initial 2 year comprehensive review followed by 3-year omnibus updates.
- Eases burden where full IFRS has previously been required.
- Stepping stone to full IFRS for private entities aiming for initial offering (IPO).
Highlight three challenges that could face SMEs in complying with IFRS.
- Learning new technologies and accounting techniques.
- Making changes to information systems and accounting software may be needed. Collecting additional data for some transactions Dealing with new concepts.
- Dealing with valuation issues.
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