Does your company need to apply the FULL IFRS or apply IFRS for SMEs ?

In fulfilling the objective of developing a single set of high quality, understandable, enforceable and globally accepted financial reporting standards the IASB has to take account of, as appropriate, the needs of a range of sizes and types of entities in diverse economic settings. IFRS for SMEs is a stand-alone document that delivers on the IASB objective of taking into account the needs of a range of sizes of entities. The IFRS for SMEs is based on full IFRS with modifications to reflect the needs of users of SMEs’ financial statements and cost-benefit considerations. One of the key definitions in the standard is the definition of SME which is defined as entities that:

• Do not have public accountability; and
• Publish general purpose financial statements for external users

Many jurisdictions around the world have developed their own definitions of SMEs for a broad range of purposes including prescribing financial reporting obligations. Often those national or regional definitions include quantified criteria based on revenue, assets, employees, or other factors.

Companies should ascertain if they need to use IFRS for SMEs by first establishing if they meet the definition of an SME.