Setting the standards for SMEs

In order to be awarded CPD units you must answer the following five random questions correctly. If you fail the test, please re-read the article before attempting the questions again.

  1. Financial reporting requirements for SMEs vary according to the jurisdiction. Sometimes they have to comply with the same requirements as other limited companies and on other occasions, they are subject to very few requirements. Which of the following characteristics is not used to determine a SME?

  2. IFRS for SMEs: International Financial Reporting Standard for Small and Medium-Sized Entities, was issued by the International Accounting Standards Board (IASB) in 2009. Why is the IFRS for SMEs very similar to full IFRS?

  3. In May 2015 the IASB completed its first comprehensive review of the IFRS for SMEs and issued limited amendments to the Standard. Those amendments are effective on 1 January 2017 with early application permitted. Which of the following is not a proposed amendment?

  4. In some quarters, it is felt that there should be less extensive financial reporting requirements for SMEs, because of their size and the costs of meeting financial reporting requirements. Which of the following is a possible reason given for a less extensive financial reporting regime of SMEs?

  5. In the USA, there is no financial reporting framework that SMEs are either required or permitted to use for preparing their financial statements. SMEs in the USA are categorised as private companies and a private company is able to select the accounting framework that fits the purpose of its financial statements. What is one reason why there is no general financial accounting framework for SMEs in the USA?

  6. In 2015, significant changes to UK company law were introduced, including changes to the disclosures required by law within small company accounts. As a result of the changes in regulation, the FRSSE is being withdrawn. From 2016, which accounting standard(s) will small entities will utilise?

  7. IFRS for SMEs: International Financial Reporting Standard for Small and Medium-Sized Entities,was issued by the International Accounting Standards Board (IASB) in 2009. Which of the following is not a difference between IFRS for SMEs and full IFRS?

  8. In 2015, a radical change occurred to UK GAAP and SME accounting. All previous FRSs, SSAPs and UITF Abstracts, with the exception of the Financial Reporting Standard for Small Entities (FRSSE), were replaced by a set of new standards. Which of the following was not a change introduced by new UK GAAP?

  9. IFRS for SMEs is aimed at private companies regardless of size that are not public interest entities. It was developed to reduce the undue burdens placed on firms by full IFRS. Which body makes the decisions as to which entities apply the IFRS for SMEs?

  10. Under the first comprehensive review of the IFRS for SMEs, when an SME utilises the exemption from certain requirements when application would cause undue cost or effort, the IFRS for SMEs requires the entity to carry out an analysis. What must the entity determine when applying this exemption?