February 28, 2007
Thank you for signing up to receive eNews from the International Federation of Accountants' (IFAC's) Small and Medium Practices (SMP) Committee. We welcome your comments.
In This Issue:
1. IFAC Encourages Input to Proposed SME Financial Reporting Standard
IFAC encourages its members, regional accountancy organizations and all those with an interest to review and provide comments on the International Accounting Standards Board's (IASB's) proposed International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs). Released earlier this month, the proposed IFRS for SMEs is largely self-contained and includes extensive recognition and measurement, disclosure and presentational requirements that are less complex than full IFRSs. IFAC supports the development of an international standard that eases the compliance burden on SMEs and meets the needs of users and preparers of their financial reports. IFAC will respond to the exposure draft from a global public interest perspective and has pledged to assist the IASB in its planned field tests.
The proposed IFRS for SMEs can be downloaded from the IASB website (http://www.iasb.org). Comments are requested by October 1, 2007.
2. New Paper Explores Micro-Entity Financial Reporting Needs
To help support the development of the proposed IFRS for SMEs, in December the SMP Committee released an information paper on the needs of users and preparers of the financial reports of micro-entities (those with less than 10 employees). Entitled Micro-Entity Financial Reporting: Perspectives of Preparers and Users, the paper summarizes existing research on issues related to micro-entity financial reporting and identifies key challenges. The paper serves as the first phase of the SMP Committee's project on this topic.
The information paper and other SMP related guidance is available free-of-charge from the IFAC online bookstore: http://www.ifac.org/store.
3. Micro-Entity Reporting Project Enters Second Phase
As part of the second phase of its project on micro-entity financial reporting, the SMP Committee has undertaken field testing to determine whether the proposed IFRS for SMEs is likely to meet the needs of users and preparers of micro-entity financial reports. The field testing, which includes interviews and surveys, is already underway in the United Kingdom and Kenya and additional countries are also planning to undertake testing. The research findings will be used in developing IFAC's response to the proposed IFRS for SMEs.
For more information on its work program, visit the SMP Committee home page at http://www.ifac.org/SMP.
4. Global Accountancy Search Engine Adds Resources for SMPs
IFACnet, the global Internet search engine developed by IFAC and its member bodies for professional accountants worldwide, is expanding its resources in the first quarter of 2007, particularly for SMPs and SMEs. Launched in October 2006, IFACnet provides one-stop access to high quality guidance, management tools and articles developed by accountancy bodies from around the world. Initially targeted to accountants working in business and industry, IFACnet is adding resources specifically targeted to SMPs and SMEs throughout the first quarter of 2007.
IFACnet can be accessed free-of-charge at http://www.ifacnet.com and on the websites of participant organizations.
5. Guide to Implementing ISAs on SME Audits
The SMP Committee is developing a non-authoritative explanatory guide to using International Standards on Auditing (ISAs) for SME audits. The ISA Guide is intended to help practitioners around the world understand, comply with, and apply ISAs to the audits of SMEs. The SMP Committee plans to review a final draft of the 300-page guide at its meeting in May 2007 and hopes to make the final guide available through the IFAC website in the second half of 2007. IFAC is also exploring ways to promote the development of local adaptations and products derived from the guide, such as audit software, checklists, questionnaires, and other materials.
More information will be available on the SMP Committee home page (http://www.ifac.org/SMP) in the coming months.
6. SMP Committee Plans Quality Control Guide
In addition to its forthcoming ISA Guide, the SMP Committee is considering the development of explanatory guides on quality control, practice management and ethics. The SMP Committee received nine proposals in response to its Request for Proposal to develop a guide to International Standard on Quality Control (ISQC) 1. The planned quality control guide is intended to help practitioners, particularly SMPs, implement ISQC 1 and deliver high quality assurance services. The proposals will be reviewed at an SMP Committee meeting later this year, and the guide is planned to be released in the third quarter of 2008.
More information is available in the Request for Proposal on the SMP Committee home page at http://www.ifac.org/SMP/index.php#Publications.
7. SMPs Encouraged to Comment on Proposed Independence Requirements
The SMP Committee strongly encourages SMPs, SMEs and IFAC member bodies to review and provide comments on the International Ethics Standards Board for Accountants' proposed revisions to the independence sections of the international Code of Ethics for Professional Accountants. The exposure draft, which was issued in December 2006, includes proposals that may have a material impact on SMPs and their clients, especially mandatory partner rotation for audits of entities of significant public interest and new restrictions on the provision of non-assurance services.
Comments on the proposed independence requirements are requested by April 30, 2007, and the exposure draft can be downloaded from the IFAC website at http://www.ifac.org/Guidance/EXD-Details.php?EDID=0075.
8. Reflecting SMP/SME Issues in International Standards on Auditing
The SMP Committee continues to devote a large portion of its resources to providing input to the development of ISAs with the goal of ensuring that SMP and SME issues are reflected in the standards. In 2006, the committee submitted over 30 comment letters to the International Auditing and Assurance Standards Board (IAASB), particularly on its project to improve the clarity of its standards. The goal of the project is to make the ISAs easier to understand and to promote adoption and translation. For information on the IAASB's standard-setting activities, visit its website: http://www.iaasb.org.
9. IFAC Speeches Focus on SMP/SME Issues
In recent months, speeches by IFAC's President, Chief Executive and other leadership have focused on issues related to SMPs. In particular, during the International Conference hosted by the Institute of Chartered Accountants of India in Chennai, India in January 2007, SMP Committee Chair Sylvie Voghel discussed efforts by IFAC to assist SMPs by providing them with resources and guidance. This speech can be viewed at http://www.ifac.org/MediaCenter/?q=node/view/273.
Other speeches on SMP/SME issues are available from Media Center on IFAC's website at http://www.ifac.org/MediaCenter/?q=speech.
10. Future SMP Committee Meetings
The next meeting of the SMP Committee will be held in Tunis, Tunisia on May 3-4, 2007. Future SMP Committee meetings will be held in Malta on November 1-2, 2007 and, provisionally, in Brazil, New York and Nigeria in 2008. Highlights of previous meetings can be viewed at http://www.ifac.org/SMP/index.php#Meetings.
The SMP Committee is also making plans to hold a one-day SMP Forum in Malta on October 30, 2007. All IFAC member bodies and regional accountancy organizations will be invited to send a representative. More information will be distributed to them in the coming months.
For more information about any of the items mentioned above or other information about the SMP Committee, please contact pr@ifac.org or visit its home page at http://www.ifac.org/smp.
About IFAC
IFAC is the worldwide 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 155 members and associates in 118 countries, 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.