EMERGING ISSUES IN FINANCIAL REPORTING QUESTON AND ANSWERS

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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