Differences between National Reporting Practices and IFRS for SMEs Presentation and Disclosure Requirements: Evidence from Italy

Abstract

The aim of this paper is to assess the differences between the International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs) requirements and national financial reporting practices. For this purpose, the IASB’s checklist was applied to a sample of financial statements prepared in Italy by non-listed manufacturing companies. The results reveal the major differences existing in the presentation of financial statements, as well as in narrative disclosure practices in management commentary and notes. Furthermore, econometric analysis suggests that the differences are influenced by certain exploratory factors, namely, profitability, leverage, size and parent company relationship. This study offers new insights into the roles of certain exploratory factors that are likely to influence the movement towards the application of the IFRS for SMEs.