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19/04/2007 | Draft Comment Letter on IFRS for SMEs

EFRAG has issued its draft Comment Letter on the Exposure Draft of the proposed IFRS for Small and Medium-sized Entities (ED IFRS for SMEs) and invites comments on the draft by no later than 31 August 2007. EFRAG’s key messages are:

EFRAG is supportive of the development of a simplified set of international financial reporting standards with requirements that are consistent with the conceptual basis of IFRS. Such a set of standards ought to increase the understandability of financial reporting by companies without public accountability. However EFRAG believes that the proposed standard can be further improved, in the following directions:

  • Final standard should be a fully stand alone document.
  • “IFRS for SMEs” is not the right label.
  • The requirements should reflect the special user needs for SME accounts.
  • Further simplifications in the recognition and measurement requirements are needed.
  • The IASB should not impose restrictions on who can claim to comply with the standard as long as it is with the local legal requirements.
  • Most of the present options should also be available for SME’s.
  • There should only be one – and not several slightly different – ways of calculating current values such as for property, inventory and financial assets.
  • Amortization of all intangible assets including goodwill should be reintroduced and the impairment only approach eliminated. All such assets should be treated as having limited useful lives.
  • The equity/liability split should be changed to facilitate the specific problems for SMEs.
  • Financial assets and liabilities should not have fair value as the default measurement attribute.

The letter can be downloaded here. Our detailed comments and proposals are provided in various attachments to the comment letter:

  • attachment 1 answers the questions set in the invitation to comment
  • attachment 2 includes detailed comments provided on each section of the proposed standard
  • attachment 3 presents and illustrates EFRAG’s proposals for restructuring and redrafting the standard to achieve the desired level of simplicity and understandability
Document : EFRAG Draft CL on IFRS for SMEs (19.04.2007).pdf
Linked Project : click here

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