The Relevance of International Financial Reporting Standards for Small and Medium-sized Entities: An Australian Case Study

Abstract

The purpose of this paper is to examine the relevance of imposing a set of accounting standards on Small and Medium-sized entities. This paper involves a multiple case study approach based on an examination from personnel experiences of owning and operating Small and Medium-sized Entities in Australia over a period of 50 years.  The key finding from the case studies is that SME’s are strongly influenced by the prevailing taxation regulations rather than any form of accounting standard requirements. The cost of meeting the financial reporting requirements is a burden that SME’s are ill prepared to bear and such costs are not justified by any claim to being useful for the owners or other possible stakeholders. Further, the issues of comparability and consistency have yet to be shown as providing a benefit to any stakeholder.This paper provides an opportunity for greater debate and research into the financial reporting requirements for SME’s.