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An Analysis Of Sme Financial Statements After The Adoption Of Ifrs For Smes A South African Case Study

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  • DANIE SCHUTTE

    ()
    (School of Accounting Sciences, North West University, Potchefstroom, South Africa)

  • PIETER BUYS

    ()
    (School of Accounting Sciences, North West University, Potchefstroom, South Africa)

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    Abstract

    The adoption of International Financial Reporting Standards by many countries is fundamental to global accounting harmonization. However the reporting requirements were often criticized as being too comprehensive and not necessarily applicable to all levels of businesses, especially smaller businesses. As a result the International Accounting Standards Board developed an accounting framework for small and medium enterprises entitled IFRS for SMEs. Even though the IFRS for SMEs might be easier to apply, many commentators warned that the framework is still too complex. They also argue that the framework is a mere scaled-down version of IFRS and that the specific disclosure requirements of small and medium enterprises have not been taken into consideration in developing the framework. In August 2007, despite the afore-mentioned concerns, South Africa became the first country to formally adopt the IFRS for SME as an accounting framework. Whether the adoption of the IFRS for SMEs in South Africa, and perhaps elsewhere, could be described as a process of accounting harmonization for small and medium enterprises remains uncertain. The focus of the study is therefore on disclosure practices by small and medium enterprises in South Africa. Based on a sample of financial statements the results suggest that despite the availability of the IFRS for SMEs, and the acceptance thereof as SA GAAP, limited South African SME’s actually embraced the accounting standard.

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    File URL: http://tbs.ubbcluj.ro/RePEc/bbn/journl/Negotia_4_2011.pdf
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    Bibliographic Info

    Article provided by Babes-Bolyai University, Faculty of Business in its journal JOURNAL STUDIA UNIVERSITATIS BABES-BOLYAI NEGOTIA.

    Volume (Year): (2011)
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    Handle: RePEc:bbn:journl:2011_4_2_schutte

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    Related research

    Keywords: Accounting; Accounting Harmonization; International Financial Reporting Standards; Small and Medium Enterprises/Entities.;

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    1. Tulus Tambunan, 2009. "Export-oriented small and medium industry clusters in Indonesia," Journal of Enterprising Communities: People and Places in the Global Economy, Emerald Group Publishing, vol. 3(1), pages 25-58, April.
    2. Agus Gunawan & Mohamed Wahdan & H. Jaap Van Den Herik, 2010. "Increasing the managerial capabilities in Indonesian garment manufacturing," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 3(4), pages 346-367.
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