Fraud Risk Assessment

AC558 - International Accounting Standards and Global Financial Reporting

Professor Rachel Byers

June 25, 2016

Unit 5

Assignment 1

1. What are five key differences between full IFRS and IFRS for SMEs?

The five key differences between full IFRS and IFRS for SME is:

Certain topics are omitted from SME standards that are included in full IFRS:

Earnings per share – Since SME have no publicly traded equity this is not viable.

Interim financial reporting

Segment reporting

Special accounting for assets held for sale.

Usually the simplest of alternative methods is chosen

Options eliminated from SME for IFRS included in full IFRS:

Investment Property – Instead of accounting policy dictating measurement, circumstances decide between cost and fair value models.

Government grants – Some options eliminated in favor for a single modified method.

Recognition and measurement principals are simplified:

Recognition and measurement principals for financial instruments are simplified, such as:

Securities are measured at cost or amortized cost, if certain criteria are met. All others are measured at fair value with changes in fair value reflected in profit and loss, eliminating the complexities of classifying securities into four categories.

De-recognition of financial instruments eliminates pass through and continuing involvement tests.

Hedge accounting is simplified.

Fewer disclosures are required

IFRS for SME’s have a simplified redrafting of the financial statements (Needles, Jr, 2013, pp. 65-67).

2. Do you believe that private companies in the United States will embrace IFRS for SMEs? Why or why not?

I believe that SME’s are looking for a simpiler method for financial statements, and will welcome the less complicated IFRS standards. With the current global environment, changing to the IFRS can make it easier for SME’s to attract foreign partners, and attract foreign capital with the adoption. Many SME’s are...