The International Accounting Standards Board finally issued its long-awaited, International Financial Reporting Standard for small and medium-sized entities (SMEs) in July. This is more important than you think.
Essentially, IFRS for SMEs is a simplified microcosm of full IFRS aimed at meeting the needs of financial reporting for private companies through a cost-benefit approach. The name is somewhat of a misnomer; in this case, size doesn’t matter as much as public accountability does. IASB struggled with the name over the project’s five-year history, going from “Non-publicly Accountable Entities” to “Private Entities,” and coming back full circle to its original name, SMEs.
