In the business world, globalization is a very current and important issue, every day there is a greater need for quality financial information and under the same language, providing transparency, as well as improving accountability, the process stakeholder decision-making and contribute to economic efficiency by helping investors identify opportunities and risks around the world, thereby improving capital allocation.
In this sense, we have that small and medium-sized companies are currently a large part of the productive fabric of each country and it is estimated that more than 90% of all companies in the world are SMEs, which is why the experts who issue standards The presentation of financial statements could not ignore this fact and for this they had to know the true needs of the users of financial statements, SMEs and thus simplify the rules without neglecting quality.
It should be noted that there are more than 140 jurisdictions that require the use of this standard (IFRS) and more than 10 jurisdictions that allow the use of this international accounting standard, and Latin America for the most part is already working with these standards. As for the group of twenty (industrialized and emerging countries G20). The relevant authority in all the jurisdictions of this group has made a public commitment to IFRS Standards as the single set of global accounting standards and fifteen of the G20 jurisdictions have adopted the IFRS standard for all or most of the companies in their public capital markets and the rest of Japan allow it voluntarily to national companies.
In the case of IFRS for SMEs, it is required to date (2018) in 86 countries and is being considered for adoption in 11 countries. Noting that five G20 jurisdictions have adopted the IFRS for SMEs standard.
The International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs) is issued by the International Accounting Standards Board (IASB). This council is part of the International Financial Reporting Standards Foundation (International Financial Reporting Standards, or simply IFRS Foundation) which is a non-profit corporation and operates in England and Wales.
The International Accounting Standards Board (IASB) was established in 2001 as part of the International Accounting Standards Committee Foundation (IASC Foundation). In 2010, the IASC Foundation was renamed the IFRS Foundation. The governance of the IFRS Foundation is exercised by 22 Trustees.
The IASB achieves its objectives primarily through the development and publication of Standards, as well as promoting their use in general purpose financial statements and other financial information.
The IFRS for SMEs is based on full IFRSs with modifications to reflect the needs of users of SME financial statements and cost-benefit considerations.
To apply this standard, the following characteristics must be met:
- be an entity that has no public accountability; and be an entity that publishes general purpose financial statements for external users.
This standard is presented in two parts, part A where the requirements are and part B that contains the complementary documents, the requirements are made up of 35 sections starting with the characterization of SMEs and ending with the transition to IFRS for SMEs.
The G20 and other major international organizations, as well as many governments, business associations, investors and members of the global accounting profession support the goal of a single set of high-quality global accounting standards.
The conversion process begins much earlier than the first financial statements under IFRS (full application) since the work begins two periods before and thus obtain an opening balance under IFRS that will be the basis for the preparation of the first financial statements under this standard, that is why there must be an organized plan, at a minimum, it should contain:
Phase 1: Scope and planning
Phase 2: Solution development
Phase 3: Implementation
Phase 4: Monitoring and improvement
Internal control must change and adapt when implementing the international standard since there are many processes that must be implemented due to the new requirements and methods to be applied demanded in the standard.
These standards represent a great challenge for the accounting profession and in the same way a great opportunity, IFRS arrived and will not go away because they represent a great advance in the quality of financial statements at an international level and of course in business, it is For this reason, we are obliged to get involved and train effectively on this subject and thus communicate with this new business language, if you do not master this language, then simply nobody will want to know what you want to report and it will be a professional with obsolete knowledge.
In Latin America we must change the chip once and for all and not continue to tax accounting, it is necessary to understand that IFRS have one objective and tax administrations another, entrepreneurs must also understand that there are more advantages than disadvantages. your company has a correct adoption of the international standard and thus fully support this process.
Many times our accountants lose their lives on the subject of taxes and be careful not to say that this issue is not important in our profession of course it is, only that we should also make an effort in terms of knowledge and application of international accounting regulations.
Users of financial statements expect information of international quality, which is why the application of the standard in the presentation of financial statements is so important, and accountants are fundamental pieces for the proper use and application of the standard, which is why that my invitation is to enter responsibly into this wonderful professional challenge.
Author: Lcdo. Michael Aular - Micdan Consulting
