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📊IFRS for SMEs: Simplifying Financial Reporting for 2025

Acclara AI•

The IFRS for SMEs Accounting Standard is getting a refresh in 2025, making financial reporting simpler for small and medium-sized entities globally. Expect fewer disclosures, plain English text, and revisions only every three years.

Key Points

  • •📉 Simplified Rules: Goodwill is amortised, borrowing and development costs expensed.
  • •📝 Less Disclosure: About 90% fewer disclosures compared to full IFRS.
  • •🌍 Global Reach: Available for any jurisdiction to adopt, except for entities with public accountability.
  • •📅 Revision Cycle: Updates limited to once every three years to ease the transition.
  • •🔤 Plain English: Text written to be easier to understand and translate.

📖 What is IFRS for SMEs?

The IFRS for SMEs Accounting Standard is a streamlined version of the full IFRS, designed to meet the needs of small and medium-sized entities (SMEs). With fewer than 330 pages, this standard aims to simplify financial reporting for the 95% of companies worldwide that fall into this category.

🔄 Simplifications Made

Compared to full IFRS and many national GAAPs, the IFRS for SMEs Accounting Standard is less complex in several ways:

  • Topics irrelevant to SMEs are omitted, such as earnings per share and segment reporting.
  • Principles for recognising and measuring assets, liabilities, income, and expenses are simplified. For example:
    • Goodwill is amortised.
    • Borrowing and development costs are recognised as expenses.
    • The cost model is available for associates and jointly-controlled entities.
    • Undue cost or effort exemptions for specific requirements.
  • Significantly fewer disclosures are required—about a 90% reduction.
  • The text is written in ‘plain English’, making it easier to understand and translate.
  • Revisions are expected to be limited to once every three years, reducing the burden of frequent adjustments.

🌍 Global Applicability

The IFRS for SMEs Accounting Standard is available for adoption by any jurisdiction, regardless of whether they have adopted full IFRS Accounting Standards. Each jurisdiction decides which entities should use the standard, with the only restriction being that entities with public accountability should not use it.