Accounting (Basics) - Lecture 1
IFRS for SMEs


About the course
nLiterature:
qInternational financial reporting standard for small and medium-sized entities (IFRS for SMEs).
London: International Accounting Standards Board, 2009. 230 s. ISBN 9781907026171. Available at:
http://eifrs.iasb.org/eifrs/sme/en/IFRSforSMEs2009.pdf
q IFRS Foundation: Training Material for the IFRS for SMEs. London: International Accounting
Standards Board. Available at: http://www.ifrs.org/IFRS-for-SMEs/Pages/Training-Modules.aspx
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About the course
nRequirements for successful accomplishment of the course:
q 85% participation (i.e. absence at max 2 seminars is excused)
q1 presentation of theory or practice during the semester (if by the end of the semester a student
doesn’t have a presentation, 10 points will be deducted from total number of points received from
both mid-semester tests). In case of practical presentation (i.e. exercise), the exercise is chosen
by a student or by a lector always minimally one week in advance. Unless the student is excused
(he/she is ill), the student has to present the exercise at specified date. Topics for theoretical
presentations should be agreed with a lecturer at the beginning of the semester.
qTwo control tests, minimum required amount is 60% of correct answers. Points from two tests are
accumulated. Tests contain theoretical (questions) and practical part (exercises).
qFinal test is a written exam. Attention! Getting a minimum amount of points from two control tests
is a necessary requirement for being eligible to take a final exam.
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Contents
nIASB, IFRS, IFRS vs. GAAP
nInternational Financial Reporting Standard (IFRS) for Small and Medium-sized Entities (SMEs)
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IASB
nThe International Accounting Standards Board (IASB) was established in 2001 as part of the
International Accounting Standards Committee (IASC) Foundation.
nThe objectives of the IASC Foundation and of the IASB are:
a)to develop  a single set of high quality, understandable and enforceable global accounting
standards that require high quality, transparent and comparable information in financial statements
and other financial reporting to help participants in the world’s capital markets and other users
make economic decisions;
b)to promote the use and rigorous application of those standards;
c)to take account of the special needs of small and medium-sized entities and emerging economies;
and
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IASB
d)to bring about convergence of national accounting standards and International Accounting
Standards and International Financial Reporting Standards to high quality solutions.
nIASB is the standard-setting body of the IASC Foundation - it is responsible for approving
International Financial Reporting Standards (IFRSs, including Interpretations) and related
documents, such as the Framework for the Preparation and Presentation of Financial Statements,
exposure drafts and discussion documents.
nThe IASB achieves its objectives primarily by developing and publishing IFRSs and promoting the
use of those standards in general purpose financial statements and other financial reporting.
nIASs and related Interpretations, which were adopted before IFRS were developed, remain applicable
with the same authority as IFRSs, unless and until they are amended or withdrawn by the IASB.
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IFRS
nIFRSs set out recognition, measurement, presentation and disclosure requirements dealing with
transactions and other events and conditions that are important in general purpose financial
statements.
nIFRSs are based on the Framework. The objective of the Framework is to facilitate the consistent
and logical formulation of IFRSs. It also provides a basis for the use of judgement in resolving
accounting issues.
nIFRSs are designed to apply to the general purpose financial statements and other financial
reporting of all profit-oriented entities. The objective of financial statements is to provide
information about the financial position, performance and cash flows of an entity that is useful to
those users in making economic decisions.
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IFRS vs. GAAP

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IFRS vs. GAAP
nGeneral comparison of US GAAP and IAS/IFRS:
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US GAAP
IFRS
•rules-based
•procedure-oriented
•emphasis on best   practice
•principles-based
•objective-oriented
•emphasis on professional judgment

nInternational Financial Reporting Standard (IFRS) for Small and Medium-sized Entities (SMEs) are
designed for small and medium-sized entities (SMEs), private entities, and non-publicly accountable
entities.
nThe term small and medium-sized entities as used by the IASB is defined as entities that:
a)do not have public accountability, and
b)publish general purpose financial statements for external users.
nAn entity has public accountability if:
a)its debt or equity instruments are traded in a public market or it is in the process of issuing
such instruments for trading in a public market, or
b)it holds assets in a fiduciary capacity for a broad group of outsiders as one of its primary
businesses.
c)
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IFRS for SMEs

nThe Fourth Accounting Directive of EC allows Member States to prescribe lighter reporting regimes
for SMEs, which are defined as following:
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IFRS for SMEs
Micro
Small
Medium-sized
Balance sheet total
≤ € 500 000
≤ € 4 400 000
≤ € 17 500 000
Net turnover
≤ € 1 000 000
≤ € 8 800 000
≤ € 35 000 000
Average number of employees during the financial year
≤ 10
≤ 50
≤ 250

nSome entities may hold assets in a fiduciary capacity for a broad group of outsiders (e.g. AUM).
If they do so for reasons incidental to a primary business, that does not make them publicly
accountable.
nA subsidiary whose parent uses full IFRSs, or that is part of a consolidated group that uses full
IFRSs, is not prohibited from using IFRS for SMEs in its own financial statements if that
subsidiary by itself does not have public accountability.
nFinancial statements prepared in conformity with the IFRS for SMEs are unlikely to comply fully
with all of the measurements required by a jurisdiction’s tax laws and regulations.
nDecisions on which entities are required or permitted to use full IFRS or IFRS for SMEs rest with
legislative and regulatory authorities and standard-setters in individual jurisdictions.
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IFRS for SMEs