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    Nov 13, 2009


    SMP Committee


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    SMP eNews

    In This Issue:

    1. IFAC/The Banker Survey Examines SME Lending, Critical Role of Accountants
    2. Other Organizations Provide Evidence on SME Access to Finance

    News from IFAC
    3. IFAC Hosts SMP Forum in Beijing
    4. IAASB Releases New Tools to Support Clarity ISA Adoption and Implementation
    5. Adoption and Implementation Materials for Revised Ethics Code Now Available
    6. Update on SMP Support Documents

    More News from Around the Globe
    7. ICAEW Launches Clarity Resource ISA Audit 2010
    8. EU Consultation on the Review of the Fourth and Seventh Company Law Directives
    9. IFRS for SMEs Update
    10. Share SMP eNews with Your Colleagues


    1. IFAC/The Banker Survey Examines SME Lending, Critical Role of Accountants

    IFAC and The Banker magazine, part of the Financial Times group, have released the results of a global survey of banks on lending to small- and medium-sized entities (SMEs). The results showed that some SMEs may have access to more credit down the road, but will have to pass more rigorous tests to demonstrate their creditworthiness. The results of the survey, which received responses from over 500 bankers over a six-week period, also confirmed that accountants play a critical role in providing information that influences lender decision making.

    Bankers expect SMEs to provide more comprehensive information in their loan applications. Survey respondents said that they will increasingly look at cash-flow information, collateral, and customer history with the bank when considering loan applications. Financial statements, key risk indicators, and industry trends are also among the key sets of information banks focus upon when making loan decisions.

    The survey results were printed in a special supplement in the October issue of The Banker. Included with the results were articles written by IFAC President Robert Bunting, CEO Ian Ball, and SMP Committee Chair Sylvia Voghel, which reflect upon the role of the accounting profession, particularly SMPs, in this lending sector. The articles and survey results can also be accessed from the IFAC website at or at

    2. Other Organizations Provide Evidence on SME Access to Finance

    A number of other projects conducted by member bodies and other organizations echo the findings of the IFAC survey:

    Member Bodies

    • The Association of Chartered Certified Accountants (ACCA), CPA Australia, and the Certified General Accountants Association of Canada (CGA-Canada) have sponsored research by the Economist Intelligence Unit, titled Access to Finance for the Small and Medium Sized Enterprise Sector: Evidence and Conclusions, which explored the problems facing SMEs in accessing finance from banks and other lenders. Based on that research and other recent studies, the accounting bodies have called for continued support for SMEs, noting that unless this sector has the confidence to resume hiring and investing, the global recovery could prove fragile.
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    • The Institute of Chartered Accountants in England and Wales (ICAEW) issued its SME Access to Finance Report. Produced with Ipsos MORI, an independent market research agency, in May and June 2009, this forward-looking research polled senior partners from large and small accounting and audit firms. It concludes, "Our report finds that senior accounting partners expect an upturn in demand for credit in the SME sector over the next 6-12 months. Policy makers, therefore, have a narrowing window of opportunity to address supply-side problems in the credit market."

    Other Organizations

    • In the US, the Federal Reserve released the results of the October 2009 Senior Loan Officer Opinion Survey on Bank Lending Practice, in which banks indicated that they continued to tighten standards and terms over the past three months on all major types of loans to businesses and households.
    • The Organisation for Economic Co-operation and Development (OECD) in its July 2009 study, The Impact of the Global Crisis on SME and Entrepreneurship Financing and Policy Responses, reported that "access to financing continues to be one of the most significant challenges for the creation, survival, and growth of SMEs, especially innovative ones. The problem is strongly exacerbated by the financial and economic crisis." The OECD concluded, "The present report brings to the attention of governments recommendations to tackle the long-standing deficiencies in the SME financial environment, as well as to prepare SMEs and entrepreneurs for a phase of innovation-led growth."
    • European SMEs face similar problems accessing finance as revealed by an SME finance survey, conducted by the UEAPME, the European craft and SMEs employers' organization. The study was based on national SME finance surveys conducted by national associations representing craft, trade, and other SMEs in Europe. The study reveals that while access to finance for SMEs in May/June 2009 was significantly worse than a year before, it is slightly better than earlier this year (February/March 2009).

    Together, the evidence suggests SMEs in most jurisdictions continue to face difficulty in accessing finance. Given the importance of SMEs as engines of economic growth and innovation, this dearth of credit threatens to undermine economic recovery in many countries. The surveys also stress the significant role that professional accountants can play in helping SMEs gain access to finance.

    IFAC has also dedicated resources to help SMPs and SMEs cope with the economic downturn. These resources are located in the section of the IFAC website devoted to the global financial crisis and the Resources section of the International Center for SMPs at

    News from IFAC

    3. IFAC Hosts SMP Forum in Beijing

    The Small and Medium Practices (SMP) Committee held is fourth annual IFAC SMP Forum at the Grand Hyatt, Beijing. Over 200 delegates from more than 40 countries--the largest gathering in the event's history--attended the event, which was co-hosted by the Chinese Institute of Certified Public Accountants and the Confederation of Asian and Pacific Accountants.

    The Forum's program featured a broad range of speakers and topics, including recent international developments, the work of the IFAC SMP Committee, as well as presentations by the World Bank and Asian Development Bank, and panel discussions on such topics as "Adapting to the Economic Turbulence and Laying Foundations for Sustainable Growth"; "Ensuring International Standards are Relevant to SMP/SMEs"; and "The Role of SMPs in Providing Business Support to SMEs."

    A full set of materials related to the Forum, including streaming video, speeches, presentations, and discussion group reports will be available soon at the SMP Committee Resources web page:

    4. IAASB Releases New Tools to Support Clarity ISA Adoption and Implementation

    To promote awareness and understanding of the Clarified International Standards on Auditing (ISAs), which were completed in March 2009, the International Auditing and Assurance Standards Board (IAASB) has released a series of non-authoritative modules to support adoption and implementation efforts.

    Each "ISA Module" consists of a brief video presentation, a set of slides, and supporting notes that explain the key principles of, and major changes in, individual ISAs. The support modules include the implications for audits of small- and medium-sized entities.

    The ISA Modules are available to download free of charge from the IAASB Clarity Center on the IFAC website: These can also be accessed through the Resources section of the International Center for SMPs:

    5. Adoption and Implementation Materials for Revised Ethics Code Now Available

    The International Ethics Standards Board for Accountants (IESBA) encourages member bodies and firms to develop plans for implementing the recently revised Code of Ethics for Professional Accountants (the Code). The revisions include strengthening the Code's independence requirements and using the word "shall" as a drafting convention to clarify requirements. The revised Code will take effect January 1, 2011.

    The IESBA has developed the following resources to support adoption and implementation: 

    • Slide Presentations: High level and in-depth that can be used to explain the content of the Code
    • Overview of Independence Requirements: A short document providing an overview of the independence requirements contained in Section 290 of the Code relating to rotation, cooling off period, provision of non-assurance services, fees, and compensation and evaluation policies
    • Comparisons: A high level and more detailed comparison that will help people understand the differences between the July 2009 Code and the previous Code
    • Template: A comparison template containing the complete text of the Code, which can assist individuals who want to understand how the provisions in their jurisdiction match up to the Code 

    To access these materials, as well as the revised Code, visit the Resources section of the Ethics homepage: A paper explaining application of the new Code to SMPs is in development.

    6. Update on SMP Support Documents

    Much more support is on the way for SMPs in 2010 from the SMP Committee as follows:

    • An updated Guide to Using International Standards on Auditing in the Audits of Small- and Medium-sized Entities (ISA Guide) is scheduled for launch in April 2010. The updated ISA Guide will feature many improvements and conform to the newly clarified ISAs. Designed to help practitioners efficiently apply ISAs to audits of SMEs, the updated ISA Guide will comprise two volumes: Volume 1 will describe the basic concepts of a risk-based audit in conformance with ISAs and as such be directed at practitioners and students with little or no understanding of ISAs; and Volume 2 will set out the practical guidance for the audit of SMEs and as such be targeted at practitioners with a reasonable working knowledge of ISAs.
    • A new Guide to Practice Management for Use by Small- and Medium-sized Practices (PM Guide) is expected in the second quarter, 2010. Under development by CPA Australia, the PM Guide is intended to help SMPs operate proficiently and profitably as well as enhance their responsiveness to the needs of their clients. The PM Guide will include practical guidance, case studies, and checklists.
    • An updated Guide to Quality Control for Use by Small- and Medium-sized Practices (QC Guide) is scheduled for issue in the third quarter, 2010. Designed to help SMPs understand and efficiently apply the recently redrafted International Standard on Quality Control 1, Quality Control for Firms that Perform Audits and Reviews of Historical Financial Information, and Other Assurance and Related Services Engagements, the updated QC Guide will conform to the revised Code of Ethics and include other enhancements.
    • The information paper, the Role of SMPs in Providing Business Support to SMEs, is expected to be released in the second quarter, 2010. The paper will provide guidance on how SMPs can better provide business support to SME clients.

    All SMP Committee documents can be accessed at

    More News from Around the Globe

    7. ICAEW Launches Clarity Resource ISA Audit 2010

    The Institute of Chartered Accountants in England and Wales (ICAEW) has launched a website, ISA Audit 2010, providing news, information, and resources to help with the implementation of International Standards on Auditing (ISAs) in the UK. 

    The launch of this website resource is timely since the UK Auditing Practices Board recently decided to adopt the Clarified ISAs (see

    8. EU Consultation on the Review of the Fourth and Seventh Company Law Directives

    The European Union (EU) is conducting a consultation on its review of the Fourth and Seventh Company Law Directives. This project is the third step in the simplification of accounting rules for SMEs and other companies in the scope of the Fourth and Seventh Company Law Directives ("Accounting Directives"), which began with a fast-track proposal in 2008. A Member State option to create a new "micro" entity category in order to exempt them from the accounting requirements under the Fourth Directive is being proposed by the European Commission, simultaneously with the launch of a stakeholder consultation.

    The current consultation aims to raise issues relating to the modernization and simplification of the Accounting Directives. Positive effects of the review will include a reduction of burden mainly for small companies, as well as qualitative improvements for all companies within the scope of these Directives. An additional objective is to increase the clarity of the text for lawmakers and users in general. Following an analysis of the comments received to the consultation paper, a legislative proposal will be presented by the end of 2009.

    A report summarizing the results from the consultation and the next steps can be seen at The Commission Services received just over one hundred original responses to the consultation, representing a full spectrum of European stakeholders. Respondents welcomed the public consultation and expressed a desire for increased debate on accounting developments.

    9. IFRS for SMEs Update

    On July 9, 2009 the International Accounting Standards Board (IASB) issued its International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs). IFAC strongly supports the new standard (see and is committed to supporting its timely widespread adoption.

    Already over 40 countries have signaled an intention, or are known to have already, adopted the standard. One of the standard's many benefits is its potential to help SMEs gain access to finance. To support the implementation of the IFRS for SMEs, the International Accounting Standards Committee Foundation (IASCF) is developing comprehensive training material. The training material will be published in a number of languages. The English language material will be downloadable free of charge at in late 2009.

    The Foundation is also working with international development agencies to provide instructors for regional workshops to "train the trainers" in the use of the training material, particularly within developing and emerging economies. Member bodies and other organizations interested in knowing more should contact Michael Wells, Director IFRS Education Initiative,

    Meanwhile, IFAC is encouraging its member bodies and regional organizations to consider running training workshop(s) using the material and is keen to hear from those organizations organizing such workshops so we may assist in its promotion: please email Paul Thompson ( with details.

    10. Share SMP eNews with Your Colleagues

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    About IFAC

    IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 157 members and associates in 123 countries and jurisdictions, representing more than 2.5 million accountants in public practice, education, government service, industry, and commerce. Through its independent standard-setting boards, IFAC sets international ethics, auditing and assurance, education, and public sector accounting standards. It also issues guidance to encourage high-quality performance by professional accountants in business.


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