5 December 2007 
 
The three professional accounting bodies* all agree that the International Accounting Standards Board (IASB) needs to go further to reduce the burden on Small and Medium Entities (SMEs) in its Proposed International Financial Reporting Standards for SMEs (IFRS for SMEs). 
 
This was the outcome of field tests commissioned by the three bodies and conducted by mid-tier accounting firm, Moore Stephens, with three Australian entities. The entities that took part in the field test included corporate entities who produce general-purpose financial reports and those who produce special purpose financial reports. 
 
Some common themes, relating to the IASB’s objectives, were prevalent in the results. These include: 
 
· More clarity is required in the area of offsetting deferred tax, accounting for contingent consideration and in the financial assets and financial liabilities area 
· Understanding was limited in relation to the 'relevant and reliable' concept in regards to the selection of accounting policies 
· Disclosure reductions were minimal for reporting entities and disclosures increased substantially for non-reporting entities that have previously adopted minimal disclosures 
· Additional disclosures made by non-reporting entities did not always meet user needs 
· Scope of the standard could increase in certain areas; and 
· A potential exists for independence concerns for auditors assisting clients on the transition to IFRS for SMEs. 
 
The three bodies agree that IFRS for SMEs as it currently stands raises issues for SMEs as some, due to their size and resources, may not have the skills or capacity to transition to the proposed standard without some external assistance. 
 
The report also suggests that a burden reduction would only be achieved if the proposed IFRS for SME significantly reduced the disclosure requirements as already identified in previous submissions put forward by the individual bodies. 
 
The field tests were conducted in addition to the separate submissions made, by each of the professional bodies, to the IASB and the Australian Accounting Standards Board (AASB) with regard to the proposed standard, earlier this year. 
 
The field test conducted on the three entities demonstrates the commitment of the Australian accounting profession to providing assistance where required to the IASB and the AASB, so that Australian entities have a voice in the international debate. 
 
* The three professional bodies are the Institute of Chartered Accountants in Australia, CPA Australia and National Institute of Accountants.