28 Aug
2013

Guidance for Micro-Sized Entities on Globally Recognized Reporting Standards


By: Juanita Vorster BUSINESS ESSENTIALS

27 September 2013

Micro enterprises are a backbone of the South African economy, and need all the help they can get. One of the barriers they face is the need to produce credible financial statements that will help them plan, successfully apply for finance and even attract investors. While most do maintain accounting records of some sort, either manually or on a computer, many lack financial expertise and rely on professional accountants to help them prepare financial statements and offer advice.

Until now, though, these very small businesses have found meeting accepted reporting standards, such as the International Financial Reporting Standards (IFRS) a burden. Even the IFRS for small and medium-sized enterprises (SMEs), which was adopted by South Africa when it was published, is too detailed for micro-sized entities. These entities are tentatively defined as having fewer than 10 employees (including those that do not have any employees).

IFRS for SMEs is intended for SMEs that do not have public accountability and that publish general purpose financial statements for external stakeholders such as shareholders, existing and potential creditors, and credit-rating agencies. Aside from South Africa, more than 80 jurisdictions have adopted it or plan to do so.

To help overcome the challenge faced by micro-sized enterprises in producing financial statements, and thus in accessing formal finance and investment, the International Accounting Standards Board has published a Guide for micro-sized entities applying the IFRS for SMEs. Developed with input from the SME Implementation Group (an advisory body to the Board), it extracts only those requirements that are likely to be necessary for a typical micro-sized entity, without modifying any of the principles for recognising and measuring assets, liabilities, income and expenses.

Faith Ngwenya, Technical and Standards Executive at the South African Institute of Professional Accountants (SAIPA), has welcomed the move: “The new guide published by the International Accounting Standards Board will greatly help very small companies to provide statements in line with globally recognised standards.”

The guide also contains further guidance and illustrative examples to help a micro-sized entity to apply the principles in the IFRS for SMEs.

SAIPA will be offering training on the new guide to its members as part of its ongoing continuous professional development programme.

 

ISSUED BY: PR Republic

MEDIA CONTACT: Juanita Vorster, 079 523 8374, juanita@prrepublic.co.za

 

ABOUT SAIPA (South African Institute of Professional Accountants)

As South Africas leading Professional Accountant (SA) institute, SAIPA plays a very important role in ensuring that its members are able to optimise their accountancy practices or add value to their employers and, by so doing, manage the wealth of the country to the benefit of its citizens.

Membership of SAIPA:

  • provides accountancy professionals with local and international recognition,
  • ensures that they remain abreast of the latest local and international developments in the accountancy profession,
  • are able to regularly network with fellow accountancy professionals, and

includes ongoing training to facilitate the necessary knowledge, competencies and functional skills members require to effectively execute their responsibilities in a manner that complies with local and international regulatory frameworks and standards.

EDITORS NOTE:

It is preferred that the full company name “South African Institute of Professional Accountants” or recognised acronym “SAIPA” be used rather than an abbreviation such as “SA Institute of Professional Accountants”

 

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