The pain versus the gain : A qualitative study on the proposed IFRS for SMEs whether it would be suitable for companies in Sweden

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Small and medium-sized enterprises (SME) are potentially the most dynamic sector of the economy and their growth is considered to be key for the overall economic well-being. Micro, small and medium-sized enterprises are socially and economically important, since they represent 99 % of all enterprises in the EU and provide around 65 million jobs and contribute to entrepreneurship and innovation. Small firms are also economically significant in all countries. It was estimated in 1997 that, there were approximately 6.3 million small or medium-sized entities or SMEs in the USA.In Europe, where there are over 20 million business enterprises, more than 5 million private entities (generally referred to as small and medium-sized entities, or SMEs) have a statutory audit and reporting obligation. Virtually every European country has developed its own simplified national GAAP for private entities, some countries have two or even three levels of GAAP for private entities. The same is true in Asia and elsewhere across the globe.On February 15, 2007, the International Accounting Standards Board (IASB) issued the exposure draft (ED) of its International Financial Reporting Standard (IFRS) for Small and Medium-Sized Entities (SME) for public comment . The aim of the proposed standard is to provide a simplified, self-contained set of accounting principles derived from the full IFRS to be used by smaller and non-listed companies.Acknowledging the need for different accounting regulation for SMEs, in December 1998, The Swedish Accounting Standards Board ( Bokföringsnämnden or BFN ) decided to write its own accounting rules so called “K Project” for unlisted entities that would contain its recommendations of accounting regulations for a company in Sweden.IASB claims that at the present time there are well over 50 jurisdictions around the world where the full IFRS is required or permitted, for all or most limited liability companies, including the micros. IASB further states that if the full IFRS has been deemed suitable for all entities, then the proposed IFRS for SMEs will also be suitable. Or is it!Based on IASB’s statement, which leads to a very interesting but yet simple research question, which is:“Would the proposed IFRS for SMEs be suitable for companies in Sweden”?Financial statements are a final result of various accounting treatments that are contained in the accounting standards. Good ac...