New international standard for SMEs

THE International Accounting Standards Board has issued an international financial reporting standard for small and medium-sized enterprises, which are estimated to represent more than 95 per cent of all companies.

The new simplified standard is a result of a five-year development process with extensive consultation of almost 120 SMEs worldwide.

National Institute of Accountants chief executive Andrew Conway said the main simplifications to the standard for SMEs include using residual value, useful life and depreciation methods for items of property, plant and equipment, and amortisation period/method for intangible assets.

"The NIA currently believes that there are other ways of cutting back the reporting burden on SMEs, such as reviewing requirements legislated in Commonwealth and state law," he said.

"But we remain open-minded and will consider whether this document could be a part of a differential reporting regime."

Accounting firm Moore Stephens, which has an office in Perth, participated in the development process of the standard.

The firm's head of technical accounting services, Rob Mackay, said the new international reporting standard for small business represented a significant improvement on a previous standard drafted in 2007.

"The implementation of the standard for SMEs will provide a more robust framework for the financial reporting of smaller entities that previously did not prepare their financial statements in accordance with the measurement and recognition criteria of the Australian Accounting Standards Board accounting standards," he said.

Mr Mackay said there would likely be an increase in financial reporting obligations for SMEs, which in turn would include an added cost