On June 27, 2013, the International Accounting Standards Board (IASB) issued a Illustrative Guidance entitled “A Guide for Micro-sized Entities Applying the IFRS for SMEs (2009)”, which, by the title itself, provides guidance in applying the International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs).
Applicability to Philippine Micro-entities
Can this be applied in the Philippines? Yes, why not.
The guidance is based on IFRS in SMEs and applying this guidance make an entity in compliance with IFRS for SMEs. IFRS for SMEs was adopted here in the Philippines and named Philippine Financial Reporting Standards for Small and Medium-sized Entities (PFRS for SMEs). Since the guidance is consistent and in accordance with IFRS for SMEs, and IFRS for SMEs and PFRS for SMEs are the same, there is no reason for this guidance not to be applicable in the Philippines.
Making PFRS for SMEs Easier to Apply
Many requirements of the PFRS for SMEs will not be relevant to micro-sized entities (‘micro entities’) as they generally only encounter a narrow range of simple transactions. Thus, this guidance makes it easy for the micro-sized entities to apply the PFRS for SMEs as it extracts from the PFRS for SMEs those that are likely to be necessary for micro-sized entities. Meaning, the guidance just summarized those provisions applicable to typical transactions entered into by micro-entities.
To clarify further, the “A Guide for Micro-sized Entities Applying the IFRS for SMEs (2009)” accompanies, but is not part of, the IFRS for SMEs. There is nothing inconsistent between the guidance and the IFRS for SMEs.
The announcement made by the IASB on the issuance of the guidance and the download link are available below.
The International Accounting Standards Board (IASB) today issued guidance to help micro-sized entities apply the IFRS for Small and Medium-sized Entities (IFRS for SMEs).
The IFRS for SMEs is a set of high quality financial reporting principles that is derived from the full set of IFRSs but tailored for the needs and capabilities of non-publicly accountable companies, estimated to account for over 95 per cent of all companies around the world, and users of their financial statements.
The IFRS for SMEs has been widely accepted around the world, with more than 80 jurisdictions having already adopted or planning to adopt the Standard. In some of these jurisdictions the IFRS for SMEs is being used by very small companies with just a few employees. In response to requests from constituents, the IASB has developed guidance both to assist micro-sized entities currently applying the IFRS for SMEs and to make the IFRS for SMEs more accessible for those considering applying it in the future. The guidance supports the IFRS for SMEs and does not constitute a separate Standard for micro-sized entities.
The guidance has been developed with input from the SME Implementation Group (an advisory body to the IASB). It extracts from the IFRS for SMEs 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. In a few areas, it also contains further guidance and illustrative examples to help a micro-sized entity apply the principles in the IFRS for SMEs.
The guidance contains cross-references to the IFRS for SMEs for matters not covered by the guidance. Consequently, having applied the guidance, an entity’s notes to the financial statements and auditor’s report could refer to conformity with the IFRS for SMEs because this guidance does not modify the requirements of the IFRS for SMEs.
Source: IASB Website
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