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BA#118! Group#1#Handout! IFRS#for#SMEs#8#Sections#188#and#10!

SECTION##1#8#Small#and#Medium8sized#Entities! ! What#are#Small#and#Medium8sized#entities#(SMEs)?! (a)#Do!not!have!public!accountability! An!entity!has!public!accountability!if:! !its!debt!or!equity!instruments!are!traded!in!a!public!market!or!it!is!in!the!process!of!issuing!such!instruments! for!trading!in!a!public!market,!or! !it!holds!assets!in!a!fiduciary!capacity!for!a!broad!group!of!outsiders!as!one!of!its!primary!businesses! (b)!Publish!general!purpose!financial!statements!for!external!users! !! Can!publicly!accountable!entities!use!IFRS!for!SMEs?!! !YES,!but!its!financial!statements!shall!not!be!described!as!conforming!to!the!IFRS!for!SMEs.! ! Can!a!subsidiary!company!who!does!not!have!public!accountability!but!whose!parent!uses!full!IFRS!use!IFRS!for!SMEs?!! !YES,!as!long!as!it!complies!with!all!the!provisions!of!the!standard.! ! PFRS#for#SMEs#(same#as#IFRS#for#SMEs)! The!Philippine!scenario!is!not!different!from!much!of!the!world! Which!entities!are!required!or!permitted!to!use!the!PFRS!for!SMEs!will!rest!with!legislative!and!regulatory!authorities! and!standardLsetters!in!individual!jurisdictions.! Specialized!activities!covered:!Agriculture,!Extractive!Activities!and!Service!Concession!Arrangements! ! SMEs#and#Philippine#Securities#Exchange#Commission#(SEC)! The!SEC!requires!that!entities!qualifying!as!SMEs!shall!use!the!PFRS!for!SMEs;!such!entities!are!not!allowed!to!use!other! financial!reporting!frameworks,!such!as!the!full!PFRS.!This!fulfills!the!goal!to!allow!comparability!of!financial!statements!of! SMEs.! ! SMEs#as#defined#by#the#SEC:! (a)#Size#Criteria:#The!entity!has!total!assets!of!between!P3!million!and!P350!million!or!total!liabilities!of!between!P3!million! and!P250!million.! (b)!It!is!not!required!to!file!financial!statements!under!SRC!Rule!68.1.! (c)! It! is! not! in! the! process! of! filing! its! financial! statements! for! the! purpose! of! issuing! any! class! of! instruments! in! a! public! market.! (d)!It!is!not!a!holder!of!a!secondary!license!issued!by!a!regulatory!agency,!such!as!a!bank!(all!types!of!banks),!an!investment! house,!a!finance!company,!an!insurance!company,!a!securities!broker/dealer,!a!mutual!fund!and!a!preLneed!company.! (e)#It!is!not!a!public!utility.! ! Exemptions#for#the#mandatory#adoption#of#PFRS#for#SMEs:! (a)!An!SME!is!part!of!a!group!either!as!a!subsidiary,!associate!or!jointly!controlled!entity,!reporting!under!full!PFRS;! (b)!An!SME!is!a!subsidiary!or!branch!of!a!foreign!subsidiary!that!will!be!moving!towards!PFRS!pursuant!to!the!foreign! countrys!published!convergence!plan;! (c)!An!SMEs!shortLterm!projections!show!that!it!will!breach!the!quantitative!thresholds!set!in!the!criteria!for!SME,!and!the! breach!is!expected!to!be!significant!and!continuing!due!to!its!longLterm!effect!on!the!entitys!total!assets!and!liabilities! (d)!An!SME!has!concrete!plans!to!conduct!an!initial!public!offering!within!the!next!two!years;! (e)#An!SME!has!a!subsidiary!that!is!mandated!to!report!under!full!PFRS;!and! (f)#An!SME!has!been!preparing!financial!statements!using!full!PFRS!and!has!decided!to!liquidate!its!assets.! ! Transitioning# If!an!SME!that!uses!IFRS!for!SMEs!in!a!current!year!breaches!the!floor!or!ceiling!of!the!size!criteria!at!the!end!of!that!current! year,! and! the! event! causing! the! change! is! considered! significant! and! continuing,! the! entity! should! transition! to! the! applicable!financial!reporting!framework.! ! However,!if!the!event!is!not!considered!significant!and!continuing!the!entity!can!continue!to!use!the!same!framework!it! currently!uses.! !

BA#118! Group#1#Handout! IFRS#for#SMEs#8#Sections#188#and#10!

Significant!and!continuing! Based!on!management!judgment! General!rule:!20%!or!more!of!total!assets!or!liabilities!would!be!considered!significant! ! Examples# 1. If! total! assets! fall! below! P3! million! at! the! end! of! the! current! year,! the! entity! should! transition! to! another! acceptable!accounting!basis!(assuming!the!event!causing!the!change!is!significant!and!continuing).! ! 2. If!total!assets!increase!beyond!P350!million!at!the!end!of!the!current!year,!the!entity!should!transition!to!full!IFRS! (assuming!the!event!causing!the!change!is!significant!and!continuing).! ! IFRS%for%SMEs%vs.%Full%IFRS! IFRS#for#SMEs! Full#IFRS! Organized!by!topic! Numbered!by!standard! Around!300!potential!disclosures! Around!3000!potential!disclosures! Less!than!230!pages! Around!2,800!pages!in!length! Anticipated!to!be!updated!on!a!threeLyearly!basis! Updated!several!times!a!year! Omitted! topics! like! Segment! reporting,! Interim! reporting,! Contain! topics! like! Segment! reporting,! Interim! reporting,! Earnings!per!share,!Insurance!and!Assets!held!for!sale.! Earnings!per!share,!Insurance!and!Assets!held!for!sale.! ! ! More!focused!on!assessing!shorterLterm!cash!flows,!liquidity! Designed! to! meet! the! needs! of! equity! investors! and! other! and!solvency! uses!of!financial!statements!in!public!capital!markets! For!privately!held!companies! Developed!primarily!for!publiclyLtraded!entities! More!focused!on!assessing!shorterLterm!cash!flows,!liquidity! Designed! to! meet! the! needs! of! equity! investors! and! other! and!solvency! uses!of!financial!statements!in!public!capital!markets! ! ! SECTION#2##Concepts#and#Pervasive#Principles! ! Differences%between%IFRS%for%SMEs%and%Framework! Subject! IFRS#for#SMEs! Comparison#to#Framework! Objectives! !!To! provide! information! about! the! financial! As!per!the!basis!in!the!conclusions!used,!the!users!of! position,! performance! and! cash! flows! of! the! financial! statements! of! an! SMEs! have! different! entity! that! is! useful! for! economic! decisionL needs!to!that!of!nonLSMEs.! making!by!a!broad!range!of!users!who!are!not!in! a! position! to! demand! reports! tailored! to! meet! their!particular!information!needs.! Qualitative! !Understandability! Fundamental!Qualitative!Characteristics! Characteristics! !Relevance! 1. Relevance! !Materiality! 2. Faithful!representation! !Reliability! ! !Substance!over!Form! Enhancing!Qualitative!Characteristics! !Prudence! 1. Comparable! !Completeness! 2. Verifiable! !Timeliness! 3. Timely! !Balance!between!benefit!and!cost! 4. Understandable! Elements!of! Statement! of! Financial! Position! ! asset,! liaibility! !IFRS!is!an!abbreviated!version!of!the!Framework.! Financial! and!equity! !Capital!maintenance!adjustments!are!not!tackled! Statements! ! in!the!IFRS!for!SMEs.! Performance!!income!and!expenses! !Overall,!no!difference!in!the!interpretations.! Recognition!of! Criteria!for!Recognition! No! differences! except! that! the! IFRS! for! SMEs! being! Elements! ! It! is! probable! that! any! future! economic! an!abbreviated!version!of!the!Framework! benefits!associated!with!the!item!will!flow!to!or! !! from!the!entity.!

BA#118! Group#1#Handout! IFRS#for#SMEs#8#Sections#188#and#10!

Measurement!

Accrual!Basis!

Offsetting!

! The! item! has! a! cost! or! value! that! can! be! measured!reliably.! ! Considers! the! probability! of! future! economic! benefits!and!reliability!of!measurement.! ! Two! common! measurement! bases! are! used:! amortized!historical!cost!and!fair!value.! ! Based! mainly! from! the! pervasive! principles! derived! from! the! Framework! and! from! the! full! IFRS.! !An!entity!must!prepare!its!financial!statements,! except! for! cash! flow! information,! using! the! accrual!basis!of!accounting! !! !Disallows!offsetting!of!assets!and!liabilities,!and! income! and! expense,! unless! required! or! permitted! in! the! relevant! sections! of! the! standard.! !!

!A!more!prescriptive!approach!is!taken!by!the!IFRS! for!SMEs!compared!to!the!Framework! ! In! practice,! those! who! utilize! the! full! IFRS! usually! restrict! measurement! to! amortized! cost! and! fair! value! No!difference! !!

No!difference!

! # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # # #

BA#118! Group#1#Handout! IFRS#for#SMEs#8#Sections#188#and#10!

SECTION#3#8#Financial#Statement#Presentation! ! Fair#Presentation#L!faithful(representation!of!the!effects!of!transactions,!other!events!and!conditions!in(accordance(with(the( definitions(and(recognition(criteria!for!assets,!liabilities!and!expenses! The!use!of!IFRS!for!SMEs!by!an!entity!with!public!accountability!DOES!NOT!result!in!fair!presentation.! ! Compliance#with#IFRS#for#SMEs! Required:!explicit!and!unreserved!statement!of!compliance!in!Notes! To!be!in!compliance,!an!entity!must!comply!with!all!requirements!of!IFRS!for!SMEs!except!when!compliance!would! be!so!misleading!so!as!to!be!in!conflict!with!the!objective!of!financial!statements! ! Going#Concern! Mgmt.!takes!into!account!all!information!about!the!future!(perspective:!at!least!12!months!from!reporting!date)! Material!uncertainties!shall!be!disclosed! ! Frequency#of#Reporting#L!at!least!annually! ! Consistency#of#Presentation!L!reclassification!of!comparative!amounts!is!required!when!presentation!or!classification!is! changed! ! Comparative#Information! Required!for!ALL!amounts!presented!in!the!FS!of!the!current!period!(2!of!each!of!the!statements!and!notes)! Full!IFRS:!IAS!1,!par.!39!requires!3!Statements!of!Financial!Position!upon!retrospective!restatement.!There!is!no! such!requirement!in!IFRS!for!SMEs.! ! Materiality#and#Aggregation! Each!material!class!of!similar!items!shall!be!presented!separately! The!same!goes!for!items!of!a!dissimilar!nature!(unless!they!are!immaterial)! ! Complete#Set#of#Financial#Statements# # Alternative#1#L!(IFRS!for!SMEs,!3.17)! 1. Statement!of!Financial!Position# 2. (a)#Single!Statement!of!Comprehensive!Income#OR#(b)#Separate!Income!Statement!&!Separate!Statement!of! Comprehensive!Income# 3. Statement!of!Changes!in!Equity# 4. Statement!of!Cash!flows# 5. Notes# ! Alternative#2#L!(IFRS!for!SMEs,!3.18)! 1. Statement!of!Financial!Position# 2. Statement!of!Income!and!Retained!Earnings# 3. Statement!of!Cash!flows# 4. Notes# # Alternative#3#!if!the!entity!has!no!items!of!other!comprehensive!income!(IFRS!for!SMEs,!3.19)! 1. Statement!of!Financial!Position# 2. Single!Income!Statement# 3. Statement!of!Cash!flows# 4. Notes# ! Presentation#of#Additional#Information#8#unlike!Full!IFRS,!IFRS!for!SMEs!does!not!address!presentation!of:! Segment!information!(IFRS!8)! Earnings!per!share!(IAS!33)! Interim!financial!reports!(IAS!34)!

BA#118! Group#1#Handout! IFRS#for#SMEs#8#Sections#188#and#10!

SECTION#4#8#Statement#of#Financial#Position! ! Statement#of#Financial#Position! Presents!an!entitys!assets,!liabilities!and!equity!as!of!a!specific!date!L!the!end!of!the!reporting!period! ! Information#to#be#presented! An!entity!shall!present!additional!line!items!when!such!presentation!is!relevant!to!an!understanding!of!the!entitys!financial! position.! ! Presentation! An! entity! shall! present! current! and! nonLcurrent! assets,! and! current! and! nonLcurrent! liabilities,! as! separate! classifications! except! when! a! presentation! on! liquidity! provides! information! that! is! reliable! and! more! relevant.! When! the! exception! applies,!all!assets!and!liabilities!shall!be!presented!in!order!of!approximate!liquidity!(ascending!or!descending).! ! Sequencing#of#items#and#format#of#items! There!is!no!prescribed!sequence!or!format!in!which!items!are!to!be!presented.! ! Information#to#be#presented#either#in#the#statement#of#financial#position#or#in#the#notes! An!entity!shall!disclose!the!following!subclassifications!of!the!line!items!presented:! (a)!PPE!L!classifications!appropriate!to!the!entity! (b)!Trade!and!other!receivables!L!amounts!due!from!related!parties,!from!other!parties,!and!from!accrued!income!not!yet! billed! (c)!Inventories!L!held!for!sale!in!the!ordinary!course!of!business,!in!the!process!of!production!for!such!sale,!and!in!the!form! of!materials!and!supplies! (d)!Trade!and!other!payables!L!amounts!payable!to!suppliers,!to!related!parties,!deferred!income!and!accruals! (e)!Provisions!for!employee!benefits!and!other!provisions! (f)!Classes!of!equity!L!paidLin!capital,!share!premium,!retained!earnings,!and!items!of!income!and!expense!that!are! recognized!in!other!comprehensive!income!and!presented!separately!in!equity! ! Differences%between%IFRS%for%SMEs%and%Full%IFRS%(IAS%1)! Subject! IFRS#for#SMEs! Full#IFRS#(IAS#1)! General! There!is!no!prescribed!balance!sheet! The!following!additional!items!are!required:! format.! However,! as! a! minimum,! ! certain! items! are! required! to! be! !Total!of!assets!classified!as!held!for!sale!and!assets! presented!on!the!balance!sheet! included!in!disposal!groups!classified!as!held!for!sale! ! !Liabilities!included!in!disposal!groups!classified!as!held!for! (See!4.2!of!IFRS!for!SMEs)! sale! ! ! Only!those!investments!that!are!to!be!accounted!for!using! the!equity!method!are!presented!as!a!line!item.! Disclosure!of! Line! items! presented! which! require! An!entity!shall!disclose,!either!in!the!statement!of!financial! subclassifications! subclassifications! are! explicitly! position! or! in! the! notes,! further! subclassifications! of! the! stated.! line!items!presented,!classified!in!a!manner!appropriate!to! ! the!entitys!operations.!Examples!of!disclosures!for!certain! It! requires! disclosure! related! to! line!items!are!given.!! trade!and!other!payables.! Additional!disclosures! It! has! no! concept! of! puttable( Specific! disclosures! are! required! for! reclassification! of! instruments.( puttable(instruments.! ! ! Specific! disclosures! are! required! for! Puttable!instruments!will!be!discussed!in!118.2! binding!sale!agreements!for!a!major! disposal!of!assets!(or!group!thereof).! ! ! !

BA#118! Group#1#Handout! IFRS#for#SMEs#8#Sections#188#and#10!

SECTION#5#8##Statement#of#Comprehensive#Income#and#Income#Statement! ! Presentation%of%Total%Comprehensive%Income! Subject! Single#Statement#Approach! Two#Statement#Approach! Financial! Statement!of!Comprehensive!Income! Income! Statement! and! Statement! of! Statement! Comprehensive!Income! Name/s! Content! Includes! all! items! of! income! and! expense! Income( Statement! L! presents! all! items! of! income! recognized!in!the!period!unless!this!IFRS!requires! and!expense!recognized!in!the!period!except!those! otherwise! covered! by! the! Statement! of! Comprehensive! Income! ! Statement( of( Comprehensive( Income! L! change! in! the!companys!net!assets!outside!profit!and!loss! Line!Items! See!5.5!of!IFRS!for!SMEs! See!5.7!of!IFRS!for!SMEs! Disclosure! Profit!or!Loss!for!the!period!attributable!to:! Same!as!that!of!a!SingleLStatement!Approach,!but!it! !NonLControlling!Interest! must! be! disclosed! only! in! the! Statement! of! !Owners!of!the!Parent! Comprehensive!Income! ! Total! Comprehensive! Income! for! the! period! attributable!to:! !NonLControlling!Interest!! !Owners!of!the!Parent! ! Changing!from!one!approach!to!another!is!considered!as!a!change!in!accounting!policy! Effects! of! corrections! of! errors! and! changes! in! accounting! policies! are! presented! as! retroactive! adjustments! of! prior!periods!and!not!as!part!of!P&L! ! Analysis#of#Expenses! Two!classifications:! By(Nature(of(Expenses!L!aggregated!in!the!statement!of!comprehensive!income!according!to!their!nature!and!are! not!reallocated!among!the!different!functions!of!the!entity! By(Function(of(Expenses!L!aggregated!according!to!their!function!as!part!of!cost!of!sales!or!cost!of!distribution!or! administrative!activities;!entity!discloses!cost!of!sales!separately!from!other!expenses! ! Differences%between%IFRS%for%SMEs%and%Full%IFRS%(IAS%1)! Subject! IFRS#for#SMEs! Full#IFRS#(IAS#1)! General!! An! entity! is! required! to! present! a! statement! of! Same!as!IFRS!for!SMEs.![IAS!1.81L1.83]! comprehensive! income! either! in! a! single! statement,! or! in! two! statements! comprising! of! a! separate! income! statement! and! a! separate! statement!of!comprehensive!income.! ! There! is! no! prescribed! format.! Management! selects! a! method! of! presenting! its! expenses! by! either!function!or!nature.!Additional!disclosure!of! expenses!by!nature!is!required!if!presentation!by! function!is!chosen.! ! [IFRS!for!SMEs!5.2,!5.11]! Line!Items! The!following!items!are!required!to!be!presented! Similar!to!IFRS!for!SMEs.![IAS!1.82L1.83]! on! the! face! of! the! statement! of! comprehensive! income!(as!a!single!statement)!as!a!minimum:! ! !Revenue!

BA#118! Group#1#Handout! IFRS#for#SMEs#8#Sections#188#and#10!

Other! comprehensive! income!

!Finance!costs.! ! Share! of! profit! or! loss! of! associates! and! joint! ventures!accounted!for!using!the!equity!method.! !Tax!expense.! ! A! single! item! comprising! the! total! of! (1)! the! postLtax! gain! or! loss! of! discontinued! operations,! and!(2)!the!postLtax!gain!or!loss!recognised!on!the! measurement!to!fair!value!less!costs!to!sell!or!on! the! disposal! of! the! assets! or! disposal! group(s)! constituting!the!discontinued!operation.! !Profit!or!loss!for!the!period.! !Items!of!other!comprehensive!income!classified! by!nature! ! Share! of! the! other! comprehensive! income! of! associates!and!jointLventures!accounted!for!using! the!equity!method! ! Total! comprehensive! income.! If! the! entity! applies! the! twoLstatement! approach,! the! last! three!line!items!above!are!presented!in!a!separate! statement! of! comprehensive! income.! Profit! or! loss! for! the! period! and! total! comprehensive! income! for! the! period! are! allocated! in! the! statement! of! comprehensive! income! to! the! amounts! attributable! to! nonLcontrolling! interests! and!owners!of!the!parent.! ! [IFRS!for!SMEs!5.5L5.7]! There!are!3!types!of!other!comprehensive!income! [IFRS!for!SMEs!5.4!(b)]! o Gains!and!losses!on!foreign!operations! o Actuarial!gains!and!losses! o Changes!in!FV!of!hedging!instruments! No!disclosures!required!in!respect!of!the!taxation! effects!and!any!reclassification!adjustments! relating!to!components!of!other!comprehensive! income! Extraordinary!items!are!not!permitted.! [IFRS!for!SMEs!5.10]!

Disclosures!

Other!comprehensive!income:! 1.!!Revaluation!surplus! 2.!Gains!and!losses!on!foreign!operations! 3.!Actuarial!gains!and!losses! 4.!Gains!and!losses!on!AFS!assets! 5.!Gains!and!losses!on!cash!flow!hedges! Additional!disclosures!are!required!with!respect!to! taxation!effects!

Extraordinary! Items! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !

Same!as!IFRS!for!SMEs.![IAS!1.87]!

BA#118! Group#1#Handout! IFRS#for#SMEs#8#Sections#188#and#10!

SECTION#6#8##Statement#of#Changes#in#Equity#and#Statement#of#Income#and#Retained#Earnings! ! Scope! Requirements!for!presenting!the!changes!in!equity!either!in!a!statement!of!changes!in!equity!or!in!a!statement!of!income! and!retained!earnings! ! Purpose! Statement!of!Changes!in!Equity!presents!the!following:! Entitys!profit!or!loss! Income!and!expense!items!under!Other!Comprehensive!Income! Effects!of!changes!in!accounting!policies! Corrections!of!errors!made! Amounts!of!investments!by!equity!investors! Dividends!and!distributions!to!equity!investors! ! Differences%between%IFRS%for%SMEs%and%Full%IFRS%(IAS%1)! Subject# IFRS#for#SMEs! Full#IFRS#(IAS#1)! What!to! Total!comprehensive!income!(differentiate! Same!as!IFRS!for!SMEs! present! amounts!attributable!to!owners!of!the!parent! ! company!&!nonLcontrolling!interests)! But! in! addition! to! that,! amount! of! dividends! as! distributions! to! owners! and! the! amount! per! share! Effects!of!retrospective!application!or! (either!in!Statement!of!Changes!in!Equity!or!in!the! restatement!made!under!Section!10! Notes)! Reconciliation!between!the!carrying! amount!at!the!beginning!and!end!of!the! period!from:! Profit!or!loss! Each!item!of!Other!Comprehensive! Income! Amounts!of!investments!by,!and! dividends!and!distributions!to,!owners! Statement!of! Permitted!under!IFRS!for!SMEs!instead!of! Not!permitted.! Income!and! Statement!of!Comprehensive!Income!and! Retained! Statement!of!Changes!in!Equity!if!the!only! Earnings! changes!are!those!from:! Profit!and!loss! Payment!of!dividends! Correction!of!prior!period!errors! Changes!in!accounting!policy! ! In!addition!to!the!information!required!by!Section! 5:! Beginning!retained!earnings! Dividends!declared!and!paid!or!payable! Restatements!of!R/E!for!corrections!of! prior!period!errors!and!changes!in! accounting!policy! Ending!retained!earnings! ! The!Statement!of!Income!and!Retained!Earnings!was!added!in!IFRS!for!SMEs!for!the!convenience!of!entities!whose!changes! only!arise!in!the!R/E!component!of!equity.!Note!that!any!SME!that!will!use!this!will!be!presenting!a!statement!that!is!not! permitted!under!the!full!IFRS.! ! ! !

BA#118! Group#1#Handout! IFRS#for#SMEs#8#Sections#188#and#10!

SECTION#7.#Statement#of#Cash#Flows! ! Objectives:! To!require!the!provision!of!information!about!the!historical!changes!in!cash!and!cash!equivalents!of!an!entity!! To!classify!cash!flows!during!the!period!from!operating,!investing!and!financing!activities!! ! Comparison%of%IFRS%for%SMEs%and%Full%IFRS%(IAS%7)# Subject! Similarities! Differences! Information!to! Both! sets! of! standards! require! cash! flows! to! be! IAS!7!goes!into!more!detail!about!each!category!and! be!presented! segregated! into! Operating,! Investing! and! provides!more!inLdepth!descriptions!of!the!classes!of! Financing! activities! in! the! Statement! of! Cash! activities.! Flows.! Additionally,! the! criteria! for! classification! into! each! of! the! three! categories! are! almost! identical!in!the!two!sets!of!standards.! As!to!method!of! In! both! sets! of! standards,! both! the! direct! and! IAS! 7! encourages! entities! to! use! the! direct! method! presentation!to! indirect!methods!of!presentation!are!allowed! of! reporting,! which! direct( method( provides( be!used! information(which(may(be(useful(in(estimating(future( cash( flows( and( which( is( not( available( under( the( indirect( method.! This! is! highly! relevant! to! users! of! financial! statements! as! longerLterm! future! cash! flows! are! pertinent! when! assessing! the! value! and! longLterm! creditworthiness! of! an! enterprise.! While! IFRS!for!SMEs!does!not!explicitly!prescribe!a!certain! method,! the! indirect! method! comes! first! in! the! standard,!and!there!is!an!indication!that!the!indirect! method! is! implicitly! favored.! Users! of! the! financial! statements! of! SMEs! have! different! needs! are! more! focused!on!shorterLterm!cash!flows!for!the!purpose! of!assessing!liquidity!and!solvency.! On!reporting! N/A! Unlike!IFRS!for!SMEs,!IAS!7!allows!cash!flows!from!all! cash!flows!on!a! activities!to!be!reported!on!a!net!basis,!and!provides! net!basis! specific! guidance! as! to! what! cash! flows! cannot! be! reported!on!a!net!basis.!The!only!prescription!in!IFRS! for! SMEs! on! cash! flows! is! that! The! aggregate! cash! flows!arising!from!acquisitions!and!from!disposals!of! subsidiaries! or! other! business! units! shall! be! presented! separately! and! classified! as! investing! activities.! On(foreign( In! both! sets! of! standards,! the! prescription! is! to! Unlike! IAS! 7,! IFRS! for! SMEs! does! not! require! the! currency(cash( record!foreign!currency!cash!flows!in!the!entitys! entity! to! apply! IAS! 21! (The! Effects! of! Changes! in! flows!(will!be! functional! currency! and! to! apply! the! exchange! Foreign! Exchange! Rates)! in! the! presentation! of! discussed!in!BA! rate! between! the! functional! currency! and! the! foreign!currency!cash!flows,!which!allows!the!use!of! 118.2/3)! foreign! currency! at! the! date! of! the! cash! flow.! A! an! exchange! rate! that! approximates! the! prevailing! similar! treatment! is! prescribed! for! cash! flows! current! rate,! such! as! a! weightedLaverage! exchange! from!foreign!subsidiaries.! rate!for!the!relevant!period.! On!cash!flows! Both! sets! of! standards! allow! alternative! IFRS! from! SMEs! does! not! make! a! distinction! as! to! from!interest! treatments! for! interest! paid,! dividends! paid! and! when!interest!paid!is!capitalized!in!accordance!with! and!dividends! dividends! received.! Interest! paid! may! be! IAS!23!(Borrowing!Costs)!and!makes!no!requirement! presented! as! either! financing! or! operating! cash! to!apply!the!aforementioned!IAS.! flows.! !Dividends! paid! can! be! treated! similarly.! Dividends! received! are! treated! either! as! operating!or!investing!cash!flows.! On!income!tax! IAS! 8! and! IFRS! for! SMEs! both! prescribe! for! IAS! 7! goes! into! more! detail! about! the! criteria! for! paid! income! tax! to! be! treated! as! an! operating! cash! treatment! during! specific! identification! on! income! flow! unless! the! income! tax! can! be! readily! tax!on!nonLoperating!activities!

BA#118! Group#1#Handout! IFRS#for#SMEs#8#Sections#188#and#10!

NonLcash! transactions! Other! transactions!

identified! or! matched! to! the! activities! that! are! taxed.!!! Both! standards! require! operating! and! investing! N/A! transactions! that! do! not! involve! cash! to! be! excluded!from!the!statement!of!cash!flows! N/A! IFRS! for! SMEs! does! not! contain! provisions! for! guidance! regarding! Investments! in! subsidiaries,! associates! and! joint! ventures! and! Changes! in! ownership! interests! in! subsidiaries! and! other! businesses.!

! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! !

BA#118! Group#1#Handout! IFRS#for#SMEs#8#Sections#188#and#10!

SECTION#8#8#Notes#to#Financial#Statement! #! Scope! The!principal!underlying!information!that!is!to!be!presented!in!the!notes#to!the!financial!statements!and!how!to!present!it! Information!in!addition!to!that!presented!in!the!financial!statements;! Narrative!descriptions!or!disaggregations!of!items!presented!in!those!statements;! Information!about!items!that!do!not!qualify!for!recognition#in!those!statements.! ! Structure#of#the#Notes! The!notes!shall:! (a)!Present!information!about!the!basis!of!preparation!of!the!financial!statements!and!the!specific!accounting!policies#used,! in!accordance!with!disclosure!of!accounting!policies!and!information!about!key!sources!of!estimation!uncertainty.! (b)!Disclose!the!information!required!by!this!IFRS!that!is!not!presented!elsewhere!in!the!financial!statements;!and! (c)!Provide!information!that!is!not!presented!elsewhere!in!the!financial!statements!but!is!relevant!to!an!understanding!of! any!of!them.! !! An!entity!shall,!as!far!as!practicable,!present!the!notes!in!a!systematic!manner.!An!entity!shall!crossLreference!each!item!in! the!financial!statements!to!any!related!information!in!the!notes.! !! An!entity!normally!presents!the!notes!in!the!following!order:! (a)!A!statement!that!the!financial!statements!have!been!prepared!in!compliance!with!the!IFRS(for(SMEs;! (b)!A!summary!of!significant!accounting!policies!applied;! (c)!Supporting!information!for!items!presented!in!the!financial!statements,!in!the!sequence!in!which!each!statement!and! each!line!item!is!presented;!and! (d)!Any!other!disclosures.! !! Disclosure#of#Accounting#Policies! An!entity!shall!disclose!the!following!in!the!summary!of!significant!accounting!policies:! (a)!The!measurement!basis!(or!bases)!used!in!preparing!the!financial!statements;!and! (b)!Other!accounting!policies!used!that!are!relevant!to!an!understanding!of!the!financial!statements.! !! Information#about#Judgements! An!entity!shall!disclose,!in!the!summary!of!significant!accounting!policies!or!other!notes,!the!judgements,!apart!from!those! involving!estimations,!that!management!has!made!in!the!process!of!applying!the!entitys!accounting!policies!and!that!have! the!most!significant!effect!on!the!amounts!recognised!in!the!financial!statements.! ! Information#about#Key#Sources#of#Estimation#Uncertainty! An!entity!shall!disclose!in!the!notes!information!about!the!key!assumptions!concerning!the!future,!and!other!key!sources!of! estimation!uncertainty!at!the!reporting!date,!that!have!a!significant!risk!of!causing!a!material!adjustment!to!the!carrying! amounts!of!assets!and!liabilities!within!the!next!financial!year.! !! In!respect!of!those!assets!and!liabilities,!the!notes!shall!include!details!of:! (a)!Their!nature;!and! (b)!Their!carrying!amount!as!at!the!end!of!the!reporting!period.! !! Comparison#between#IFRS#for#SMEs#and#Full#IFRS#(IAS#1)!! 1.# GENERAL:# Notes! are! an! integral! part! of! the! financial! statements! because! they! provide! additional! information! to! the! amounts!disclosed!in!the!primary!statements.! 2.#STRUCTURE:# IAS!1!has!more!extensive!disclosures!requirements,!as!well!as!a!sensitivity!analysis.!The!primary!benefit!to! SMEs!will!be!that!the!quantum!of!disclosures!required!by!other!sections!of!the!standard!will!reduce!the!overall!amount!of! disclosable!items.! 3.#ACCOUNTING#POLICIES:# IAS!1!provides!greater!guidance!in!respect!of!specific!disclosures.!However,!this!should!not!give! rise!to!any!particular!differences!in!respect!of!these!disclosures.! 4.# SENSITIVITY# ANALYSIS:# IAS! 1! requires! sensitivity! analysis! for! information! about! judgements! and! key! sources! of! estimation!uncertainty.!

BA#118! Group#1#Handout! IFRS#for#SMEs#8#Sections#188#and#10!

SECTION#10#8#Accounting#Policies,#Changes#in#Accounting#Estimate#and#Errors! ! Objectives:! 1.!To!enhance!the!relevance!and!reliability!of!an!entitys!financial!statements! 2.!Comparability!of!financial!statements!over!time!and!with!other!financial!statements.!! 3.!Disclosure!requirements!for!accounting!policies! ! Scope:! Selecting!and!applying!accounting!policies!and!accounting!for!changes!in!accounting!policies,!accounting!estimates!and! corrections!of!prior!period!errors.! ! Exemptions:!retrospective!adjustments!of!tax!related!errors!(PAS!12!shall!be!followed)! ! Definition#and#Important#Terms! ! Accounting(policies! Specific!principles,!bases,!conventions,!rules!and!practices!applied!by!an!entity!in!preparing!and!presenting! financial!statement!! Examples:!change!in!method!of!inventory!pricing!from!FIFO!to!weighted!average!or!initial!adoption!of!policy!to! carry!assets!at!revalued!amount! ! Accounting(estimate! An!adjustment!of!the!carrying!amount!of!an!asset!or!a!liability,!or!the!amount!of!the!periodic!consumption!of!an! asset,!that!results!from!the!assessment!of!the!present!status!of,!and!expected!future!benefits!and!obligations! associated!with,!assets!and!liabilities.!! Examples:!estimate!of!bad!debts,!warranty!costs!or!depreciation!expense! ! Prior(period(errors! Are!omissions!from,!and!misstatements!in,!the!entitys!financial!statements!for!one!or!more!prior!periods!arising!from!a! failure!to!use,!or!misuse!of,!reliable!information!that:!! 1. Was!available!when!financial!statements!for!those!periods!were!authorized!for!issue;!!! 2. Could!reasonably!be!expected!to!have!been!obtained!and!taken!into!account!in!the!preparation!and!presentation! of!those!financial!statements.!! ! ! ! ! !! !! !! ! ! ! ! ! ! ! Retrospective(application!L!Applying!a!new!accounting!policy!to!transactions,!other!events!and!conditions!as!if!that!policy! had!always!been!applied.! ! Prospective(application(L!New!accounting!policy!is!applied!to!events!and!transactions!occurring!after!the!date!of!change.! ! ! ! ! ! Retrospective(restatement(L!Correcting!the!recognition,!measurement!and!disclosure!of!amounts!of!elements!of!financial! statements!as!if!a!prior!period!error!had!never!occurred.!! ! Impracticable((only!applies!to!retrospective!application)! Effects!are!not!determinable! Requires!assumptions!about!what!managements!intentions!would!have!been!at!that!time! Requires!significant!estimate!and!it!is!impossible!to!distinguish!objectively!information!about!that!estimate!that! existed!at!that!would!have!been!available!at!that!time.! ! ! ! ! ! ! ! !

BA#118! Group#1#Handout! IFRS#for#SMEs#8#Sections#188#and#10!

! Differences%between%IFRS%for%SMEs%and%Full%IFRS%(IAS%8)! Subject! IFRS#for#SMEs! The! hierarchy! of! guidance! that! 1.! The! requirements! and! guidance! in! management!can!follow!in!the!absence! this! IFRS! dealing! with! similar! and! of!an!IFRS!that!specifically!applies!to!a! related!issues,!and! transaction,!other!event!or!condition! ! 2.! The! definitions,! recognition! criteria! and! measurement! concepts! for! assets,! liabilities,! income! and! expenses! and! the! pervasive! principles! in! Section! 2! Concepts(and(Pervasive(Principles.! ! 3.! Management! may! also,! but! is! not! obliged!to,!consider!full!IFRS!

Full#IFRS#(IAS#8)! 1.! The! requirements! in! IFRSs! dealing! with!similar!and!related!issues;!and! ! 2.! The! definitions,! recognition! criteria! measurement!concepts!for!assets! ! 3.! May! also! consider! the! most! recent! pronouncements! of! other! standardL setting! bodies! that! use! a! similar! conceptual! framework! to! develop! accounting! standards,! other! accounting! literature! and! accepted! industry!practices!! ! Where!it!is!impracticable!to!determine! Only! relief:! the! entity! restates! the! First( relief:( !the! entity! will! restate! the! the!period!specific!effects!of!an!error!! opening! balance! of! assets,! liabilities! opening! balance! of! assets,! liabilities! ! ! and! equity! for! the! earliest! period! that! and! equity! for! the! earliest! period! that! it!is!practicable.! it!is!practicable!! ! Second( relief:( The! entity! will! restate! the! comparative! information! prospectively! from! the! date! that! it! is! practicable.!! ! Other!issues!addressed!by!the!full!IFRS!and!IFRS!for!SMEs!such!as!consistency!of!accounting!policies,!changes!in!accounting! policies!and!changes!in!accounting!estimates!are!essentially!the!same.!

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