Principal, KPMG Ireland
To maintain alignment with IFRS® Accounting Standards, the International Accounting Standards Board (IASB) is proposing updates to the International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs) to reflect some recent standards that have become effective – e.g. IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers – and other changes made to IFRS Accounting Standards since the last update in 2015.
The proposed updates would mean that the standard largely aligns with IFRS Accounting Standards but some areas of divergence would remain – notably the IASB is proposing to defer alignment on IFRS 16 Leases.
The goal for the IASB in maintaining the IFRS for SMEs is to minimise the differences from full IFRS Accounting Standards while keeping it simple. The proposals aim to do this by aligning the standard with many of the current requirements. We welcome the IASB’s efforts but believe it is missing an opportunity by deferring alignment with IFRS 16.
What are the proposed changes?
The IASB is proposing changes to all sections of the standard. However, many of these are editorial in nature. The following table summarises some of the more important changes:
|Section 2 Concepts and Pervasive Principles||
|Section 9 Consolidated and Separate Financial Statements||
|Section 11 Basic Financial Instruments and Section 12 Other Financial Instruments||
|Section 12 Fair Value Measurement||
|Section 19 Business Combinations and Goodwill||
|Section 23 Revenue||
Are there areas where differences would remain?
The IASB is also seeking views from stakeholders on areas of the standard that it is not currently seeking to change. These include the following.
|Standard/Topic||Reason for no change|
|IFRS 16 Leases||The IASB believes that aligning the standard with IFRS 16 now would impose an undue burden on SMEs|
|IFRS 14 Regulatory Deferral Accounts||IFRS 14 may be replaced when the IASB project on rate-regulated activities is completed|
|Cryptocurrency||The IASB believes that the use of cryptocurrency is not prevalent among SMEs|
Have your say by 7 March 2023
Read the exposure draft and don’t miss your opportunity to have your say before 7 March 2023. For further information on the proposals, speak to your KPMG contact.
* Read our comment letter (PDF 360KB)
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