IFRS FOR SMEs
(International Financial Reporting Standard for Small and Medium-sized Entities)
1.1 What is the objective of PFRS for SMEs?
The objective of PFRS for SME is to develop a set of high quality, understandable and enforceable standards for SMEs. Which includes proper accounting practices for the preparation and presentation of financial statements that creates a common understanding between preparers and users of financial statements. PFRS for SME are intended for small and medium sized entities that help the owners-managers in making management decisions with the exception in the determination of taxable income and determination of distributable income. 1.2 What are the standards issued by the International Accounting Standard Board (IASB) and its counterpart in the Philippines? The standard issued by the International Accounting Standard Board (IASB) is stated in its approved statements- International Financial Reporting Standards (IFRS) and its counterpart in the Philippines is Philippine Financial Reporting Standards (PFRS). 1.3 What are the benefits of using PFRS for SMEs?
The benefit of using PFRS for SME is for the financial statements’ users to have a common set of accounting standards and for the SME financial statements to be comparable from one country to another.
OVERVIEW OF THE PFRS FOR SMEs
1. When was PFRS for SME issued globally?
PFRS for SME was issued globally in July 2009.
2. When was PFRS for SME adopted in the Philippines?
PFRS for SME was adopted in the Philippines on October 13, 2009. 3. What is the definition of SME adopted by the Philippine SEC? Small and medium-sized entities are entities that do not have public accountability, and publish general purpose financial statements for external users. 4. What entity is eligible to use the PFRS for SME?
Small and medium sized entities are eligible to use PFRS for SME. 5. What is public accountancy?
Public accountancy is the field of accountancy profession where practitioners practice public accounting. Individual practitioners, small accounting firms and large multinational organizations render independent and expert financial services to the public such as auditing, taxation and management advisory services. 6. What are the names used for small medium entities (SME)? Other names of SME are private entities and non-publicly accountable entities. 7. Is the PFRS for SME linked to the full PFRS?
PFRS for SME is linked to the full PFRS in the sense that they are consistent in the IASB mission to develop in the public interest a single set of high quality, understandable and enforceable global accounting standards that require high quality, transparent and comparable information in financial reporting to help participants in the various capital markets of the world and other users of the information to make economic decisions. 8. How does it differ from full PFRS for SME?
Full PFRS for SME can be different from these larger, publicly accountable entities in several ways including: (a) The users of entities financial statements and their information needs. (b) How the financial statements are used by those users. (c) The depth and breadth of accounting expertise available to the entity. (d) SMEs ability to bear the costs of following the same standards as the larger public accountable entities. 9. What are the wordings of the audit for SMEs?
The wordings used for the audit of SMEs must be in accordance to the GAAP and applicable standards. SECTION1: INTRODUCTION
1.1 Define Small and Medium sized Entities.
Small and Medium sized entities are entities that:
(a.) Do not have public accountability.
(b.) Publish general purpose financial statements for external users. 1.2 What are general purpose of financial statements?
Statement prepared to meet the needs of all financial statement users as opposed to meeting the needs of only...