Accounting principles must be adapted to the needs of SMEs

Current proposals by the International Accounting Standards Board (IASB) on international financial reporting standards (IFRS) for small and medium-sized entities do not meet with the acceptance of the AG Mittelstand. This study group which is an association of eight organisations from trade, industrial art, hotel and restaurant industry and financial business keeps a sceptical eye on the actions of the IASB. These would lead to the capital of private companies and co-operatives not being shown as equity any more but as liability under the rules of IFRS.

In principle the AG Mittelstand supports the work of the IASB and the formulation of IFRS for small and medium-sized entities (SMEs). After all it may be useful to internationally operating SMEs to report in accordance with IFRS, if foreign business partners prefer IFRS accounts, which are often familiar to them, to accounts according to the German HGB rules.
However, reporting in accordance with IFRS, is by far not reasonable for all small and medium-sized entities, says the AG Mittelstand study group, given that not all SMEs operate internationally. Therefore the application of IFRS should be voluntary.

Given that the application of IFRS was an insurmountable bureaucratic barrier to SMEs, it was important to tailor this body of rules and regulations to the needs of SMEs. In particular the complexity of the current IFRS had to be markedly reduced for SMEs. For small and medium-sized entities the IFRS should be simple, understandable and consistent, says the study group.

One could not expect of SMEs to apply complex mathematical and statistical appraisal models in order to determine the present value of a balance sheet item. IFRS must not entail a complexity to SMEs which could only be coped with by the help of expert knowledge. Furthermore, the comprehensive disclosure requirements imposed by current IFRS should be strongly simplified as well. GERMAN

Matomo