UNCTAD-ISAR Accounting and Financial Reporting

Guidelines for SMEs

The Exchange – World BankAmman, Jordan

18 June 2013

UNCTAD-ISAR -Accounting by SMEs

• Outline:• Introduction to UNCTAD-ISAR • Background to the work on Accounting by

SMEs•Main features of the SMEGAs• Follow-up work on the SMEGA Level 3

Introduction – UNCTAD-ISAR

• ISAR stands for - the Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting.

• ECOSOC Resolution 1982/67• To promote reliable and comparable corporate

reporting.

Introduction – UNCTAD-ISAR continued…

• Serviced by the United Nations Conference on Trade and Development (UNCTAD)

• Held 29 annual sessions so far.• Close to 300 experts from about 90 countries

participate at the annual session of ISAR.

Importance of the SME Sector

• Employment; • Essential goods and services;• Export; and • Tax base.

SMEs and Access to Finance

Source: Bank Financing for SMEs Around the World, Policy Research Working Paper 4785, World Bank, November 2008.

Main obstacles for SME financing

Source: Bank Financing to Small and Medium-Sized Enterprises (SMEs) in Colombia, Policy Research Working Paper 4481, World Bank, January 2008.

Background – Accounting by SMEs

• UNCTAD-ISAR Seventeenth Session - July 2000.• Growing volume of International Accounting

Standards• Need for simple, understandable and user-

friendly accounting and reporting system designed with SMEs in mind

• UNCTAD-ISAR Consultative Group on Accounting by SMEs

Categorisation of SMEs

Source: Bank Financing to Small and Medium-Sized Enterprises (SMEs) in Colombia, Policy Research Working Paper 4481, World Bank, January 2008.

Accounting by SMEs – the approach

• Diversity in categorization of SMEs • Qualitative rather than quantitative

categorization.

Accounting by SMEs – the approach

Three-tiered approach: • Public securities or significant public

interest;• Significant business enterprises, no public

securities, no significant public interest; and • Smallest entities, owner managed, few

employees.

Accounting by SMEs – the approach…

Accounting and reporting requirements by category:

• Full set of IFRS;• A condensed set of requirements derived

from IAS; and • Simple accruals-based accounting system.

Accounting by SMEs – the Guidance

IFRSMore than 3,000 pages

SMEGA Level 2

66 pages

SMEGA Level 3

16 pages

Follow-up activities – SMEGA Level 3

Updating SMEGA Level 3:• Twenty-third session (October 2006) revision

of SMEGA Level 3 proposed• Completed November 2008• One of the main changes - an optional cash

flow statement .

Follow-up activities – SMEGA Level 3

• Training for SME owners and employees- in cooperation with Empretec centers

• Research on the current state of accounting and financial reporting needs of SMEs

For Further Information:

Please visit the ISAR website at:

http://www.unctad.org/isar

Link to ISAR publications on SMEGAs

http://unctad.org/en/Pages/DIAE/ISAR/Financial-Accounting-and-Reporting.aspx

Accounting and Financial Reporting Guidelines for SMEs

Thank you.