JEFF-MIKE SMITH

PFRS for SMEs SULE,

FRIACC, ENP, REB,

Part 1 REA, CPA, MICB

LECTURER
PFRS FOR SMES
A s e l f - c o n ta i n e d s e t o f sta n d a r d s i n c o r p o ra t i n g a c c o u nt i n g p r i n c i p l e s b a s e d o n
f u l l P F RS
B E N EF I TS O F P F RS FO R S M ES
• U n d e rsta n d i n g t h e g l o b a l f i n a n c i a l re p o r t i n g l a n g u a g e
• Global recognition
• Att ra c t i n g ta l e n t e d f i n a n c e p e o p l e
• P r e p a ra t i o n fo r I P O S
• Simplification
• O p p o r t u n i t i e s r e l a t e d t o “o n e - o f f ” exe m p t i o n s o f fe r e d b y P F RS 1 .
KEY CORNERSTONES UNDERLYING PFRS FOR SMES

SCOPE
• P F RS fo r S ME s h a s b e e n d e s i gn ed fo r a n e nt i t y w i t h n o p u b li c a c co u ntabi lit y.
AN ENTITY HAS PUBLIC ACCOUNTABILITY I F :
• I t has i ssued o r i s i n t he process o f i ssuing debt, equity o r o t her i nstruments i n a
public market
KEY CORNERSTONES UNDERLYING PFRS FOR SMES

A N E N T I T Y H A S P U B L I C A C C O U N TA B I L I T Y I F :
2 . I t h o l d s a s s e t s i n a f i d u c i a r y c a p a c i t y fo r a b ro a d g ro u p o f o u t s i d e rs a s o n e o f i t s
primary businesses
E X A M P L ES :
▪ Bank
▪ I n s u ra n c e c o m p a ny
▪ S e c u r i t i e s b ro ke r / d e a l e r
▪ Pe n s i o n f u n d
▪ Mutual fund
▪ I nv e st m e nt b a n k .
KEY CORNERSTONES UNDERLYING PFRS FOR SMES

Def i n it ion o f a n S M E
✓ Avo i ds a q u a nt if ied s i ze te st
✓ A d o pt s a p u b l ic a c co untabilit y p r i nc iple
✓ 5 0 - e m ployee ( o r s ma l ler) gu i d eline fo r d ete r mining t y p e s o f t ra n sact ions a d dres sed
FULL PFRS VS. PFRS FOR SMES

▪ 2,800 pages reduced to 250 pages of PFRS

▪ S o m e g u i d a n c e i n f u l l P F R S i s n o t r e p l i c a te d i n P F RS fo r S M E s
▪ To p i c s n o t r e l e va n t t o S M E s w e r e o m i tt e d
▪ S u m m a r i ze s t h e r e q u i re m e n t s o f f u l l P F RS w h i l e re ta i n i n g t h e s a m e a c c o u nt i n g t r e a t m e n t
▪ “G A A P h i e ra r c hy ” o p t i o n t o c o n s i d e r f u l l P F R S g u i d a n c e fo r t ra n s a c t i o n s n o t c o v e r e d b y
P F RS fo r S M E s

S o m e I F R I C a n d S I C h av e b e e n i n c o r p o ra te d i n to re l e va n t s e c t i o n s o f P F RS fo r S M E s
U n d u e c o st o r e f fo r t p r i n c i p l e i n t ro d u c e d t o r e p l a c e t h e i m p ra c t i c a b i l i t y r e l i e f c r i t e r i o n o f f u l l
P F RS

▪ “ I m p ra c t i c a b l e ” w h e n t h e e n t i t y c a n n o t a p p l y a f t e r m a k i n g e v e r y r e a s o n a b l e e ffo r t t o d o s o
▪ B a l a n c i n g c o st s a n d b e n e f i t s
▪ Re q u i r e s m a n a g e m e n t ’s j u d g m e n t

S M Es c a n u s e t h e exe mpti o ns a n d exc e pti o ns i n c l uded i n P F RS 1

• O pt i ona l exe mpt i ons fo r f i rst t i me a d o pters i n cl ude d i n P F RS1
• S M Es a r e a d di ti o na l l y exe mpted f ro m r et ro s pec t i vel y p res ent i ng d i s cont i nued o p e rat i ons
SUBSIDIARY WHOSE PARENT USES FULL PFRS

S u b s i d i a r y i s n o t p ro h i b i t e d f ro m u s i n g P F R S fo r S M E s i n i t s o w n f i n a n c i a l sta t e m e n t s i f
s u b s i d i a r y d o e s n o t h av e p u b l i c a c c o u n ta b i l i t y.

I f t h e p a r e n t p r e p a r e s c o n s o l i d a te d FS a n d t h e r e a r e :
1 . D i ffe r e n c e s i n a c c o u nt i n g p o l i c i e s - s u b s i d i a r y c a n n o t u s e P F R S fo r S M E s
2 . N o d i ffe r e n c e – s u b s i d i a r y m ay u s e P F R S fo r S M E s ; a n a l ys i s o f d i ffe r e n c e s t o b e m a d e b y
the parent
SI GNIFICANTLY REDUCED DISCLOSURE REQUIREMENTS
Reduced/omitted di sclosures:
▪ Re l a t e d t o f u l l P F R S t o p i c s o m i tt e d f ro m P F R S fo r S M E s
▪ Re l a t e d t o r e c o g n i t i o n a n d m e a s u r e m e n t p r i n c i p l e s i n f u l l P F RS r e p l a c e d b y s i m p l i f i c a t i o n
i n P F RS fo r S M E s
▪ N o t i n c l u d e d o n t h e b a s i s o f u s e rs ’ n e e d s o r c o st - b e n ef i t c o n s i d e ra t i o n s
OMIT TED TOPICS

▪ I n t e r i m F i n a n c i a l Re p o r t i n g ( PA S 3 4 )
▪ P r e s e n ta t i o n O f S e g m e n t I n fo r m a t i o n ( P F R S 8 )
▪ P r e s e n ta t i o n O f Ea r n i n g s Pe r S h a r e I n fo r m a t i o n ( PA S 3 3 )

✓ I f S M E s e l e c t t o a p p l y o m i tt e d t o p i c s , t h e y s h a l l d e s c r i b e t h e b a s i s fo r p r e p a r i n g a n d
p r e s e n t i n g s u c h i n fo r m a t i o n
✓ U s e h i e ra r c hy u n d e r s e c t i o n 1 0 , a c c o u n t i n g p o l i c i e s , e st i m a t e s a n d e r ro rs .
C L A SS I FI C AT I ON, P R ESEN TAT I ON , A N D M EA SU R EMENT O F A S S ETS H E LD FO R S A L E

T h e r e i s n o “ h e l d fo r s a l e ” c l a s s i f i c a t i o n fo r n o n - f i n a n c i a l a s s e t s , a n d l i a b i l i t i e s a n d r e l a t e d
m e a s u r e m e nt p ro v i s i o n s
( P F RS 5 , n o n - c u r r e n t a s s e t s h e l d f o r s a l e a n d d i s c o n t i n u e d o p e r a t i o n s )
• S M E s a r e r e q u i r e d to i d e n t i t y a n d s e g r e g a te d i s c o n t i n u e d o p e r a t i o n s
T h e s e a r e p r e s e n te d i n t h e sta te m e n t o f c o m p r e h e n s i v e i n c o m e
• Fo r c u r r e n t p e r i o d a n d a l l p r i o r p e r i o d s p r e s e n te d i n t h e FS ,
• Not required if impracticable
• F i r st - t i m e a d o p te r s o f P F R S f o r S M E s a r e n o t r e q u i r e d to r e - p r e s e n t r e t r o s p e c t i v e l y
discontinued operations.
SECTION 34. SPECIALIZED ACTIVITIES
P F RS fo r S M E s d o e s n o t c o n ta i n r e q u i r e m e n t s fo r i n s u ra n c e c o m p a n i e s ( P F RS 4 , i n s u ra n c e
c o n t ra c t s )
I n c o r p o ra te s i n d u st r y s p e c i f i c r e q u i r e m e nt s fo r :
▪ A g r i c u l t u ra l c o m p a n i e s
▪ E x t ra c t i ve i n d u st r i e s
▪ S e r v i c e c o n c e s s i o n a r ra n g e m e n t s
C o r r e s p o n d s t o t h e fo l l o w i n g :
• PA S 4 1 , A g r i c u l t u r e
• P F RS 6 , E x p l o ra t i o n Fo r A n d Eva l u a t i o n O f M i n e ra l Re s o u r c e s
• I F R C I 1 2 , S e r v i c e C o n c e s s i o n A r ra n g e m e nt s .