IFRS vs IFRS for SMEs

The majority of financial statements in South Africa are arguably compiled by implementing the International Financial Reporting Standards for Small and Medium-sized Entities (IFRS for SMEs) as a financial reporting framework. The International Accounting Standards Board (IASB) published IFRS for SMEs during July 2009. The standard was introduced in order to reduce complexities and the burden associated with applying full IFRS for small and medium-sized entities. The standard was designed in order to fulfil the needs of the users of the financial statements of small and medium-sized entities.

In accordance with the Regulations of the Companies Act, the following profit companies are allowed to implement IFRS for SMEs as a financial accounting framework:

  1. Public companies not listed on an exchange, provided that the company meets the scoping requirements for IFRS for SMEs;
  2. Profit companies, other than state-owned or public companies, whose public interest score for the particular financial year is at least 350, provided that the company meets the scoping requirements for IFRS for SMEs;
  3. Profit companies, other than state-owned or public companies-
    • Whose public interest score for the particular financial year is at least 100 but less than 350; or
    • Whose public interest score for the particular financial year is less than 100, and whose statements are independently compiled
  4. Profit companies, other than state-owned or public companies, whose public interest score for the particular financial year is less than 100, and whose statements are internally compiled.

The scoping requirements of IFRS for SMEs state that the following entities are allowed to implement the framework:

  1. IFRS for SMEs is intended for use by small and medium-sized entities. Small and medium-sized entities are entities that:
    • Do not have public accountability; and
    • Publish general purpose financial statements for external users.

The use of IFRS for SMEs ensures the following benefits for the entities that implement the standard as a financial reporting framework[1]:

  1. Some topics in full IFRS Standard are omitted because they are not relevant to typical SMEs;
  2. Some accounting policy options in full IFRS Standards are not allowed because a more simplified method is available to SMEs;
  3. Many of the recognition and measurement principles that are in full IFRS Standards have been simplified;
  4. Substantially fewer disclosures are required; and
  5. The text of full IFS Standards has been redrafted in “plain English” for easier understandability and translation.
  • [1] In accordance with the IASB website

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)


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IC Marais

Professional experience:

IC Marais is a certified CA (SA) with public sector and private sector technical knowledge based on 5 years’ Public Sector accounting, auditing and financial management experience and 5 years audit, tax and accounting experience. Detailed knowledge of private and public sector accounting and auditing standards (GRAP, IPSAS, IFRS, IAS, ISA) and public sector financial legislation (MFMA, etc.)

He enjoys the outdoors, hunting and fishing.

ic@newtons-sa.co.za

SCHALK GOUWS

Professional experience:

In 1995, Schalk started as a trainee at Warner and Newton (which became Moores Rowland in 1997 and then Mazars Moores Rowland in 2007) in Bloemfontein. In 1998, Schalk was appointed as manager at Moores Rowland, where he became a partner in 2003. Schalk received his Postgraduate Certificate in Advanced Taxation in 2006 and in 2009 he received his Certificate in the Administration of Estates.

schalk@newtons-sa.co.za

CEDRIC PETERSON

Professional experience:

Cedric started as a trainee at Warner and Newton (which became Moores Rowland in 1997 and Mazars Moores Rowland in 2007), Bloemfontein, in 1986. After completion of his articles, he joined the Special Investigations Division of the Department of Finance (SA Revenue Services) as a senior inspector from 1990 to 1991.

cedric@newtons-sa.co.za

LUCHA GREYLING

Professional experience:

Lucha started her career as a tax inspector at the Inland Revenue Department of New Zealand. After this she worked in commerce in Canada, Mexico and the United States.

On her return to South Africa, she completed her CA training contract with us and has been with Newtons ever since. She became a Partner in 2012.

Apart from her CA(SA) qualification she also holds a postgraduate certificate in Advanced Taxation (2005) and has the overall responsibility for training as our Training Officer.

lucha@newtons-sa.co.za