Who should the IFRS for SMEs apply to?
The proposed tier system identifies publicly accountable entities as those which have debt or equity instruments on a public market, are a deposit taking entities and/or hold assets in a fiduciary capacity for third parties. These entities will apply full IFRS and not IFRS for SMEs. This raises an interesting consideration for the not-for-profit sector: not only does the ‘public accountability’ definition have a different interpretation than that we are perhaps used to in the sector, but the definition may result in a greater degree of incomparability. If the requirement for publicly accountable entities to follow full IFRS has no exceptions we may find situations where not-for-profit entities, through the virtue of individual transactions such as raising debt through a bond issue, follow completely different guidance from their closest peers. Indeed, as full IFRS may not be covered by the not-for-profit standard those not-for-profit entities with public accountability may not even have the benefit of that ‘translation’.
The concept of public accountability therefore seems fundamental to the ‘post IFRS’ not-for-profit landscape and one which will be watched with close interest.
Does this directly affect you? Do you think that comparability is important to the sector?
Find out more on our IFRS for SMEs site