Proposed updates to IFRS for SMEs®

The IFRS for SMEs Accounting Standard will be updated by the International Accounting Standards Board (IASB) of the IFRS Foundation to reflect updates to the full IFRS Accounting Standards while maintaining the Standard’s applicability for small and medium-sized enterprises.

The IASB’s recommendations include simplifying requirements based on IFRS 13 Fair Value Measurement and IFRS 15 Revenue from Contracts with Customers and amending the Standard’s guiding concepts to conform to those of The Conceptual Framework for Financial Reporting, released in 2018.

As a result of additional criteria in IFRS 3 Business Combinations, IFRS 9 Financial Instruments, IFRS 10 Consolidated Financial Statements, and IFRS 11 Joint Arrangements, the IASB is also recommending updating the Standard. Since the second edition of IFRS for SMEs Accounting Standard was released in 2015, more enhancements to complete IFRS Accounting Standards have been implemented, and these are included in the proposed modifications.

Suggested changes to the IFRS for SMEs

While there are proposed changes to all sections of the standard, the table below lists the most important ones:

Topic Proposed changes
Definition of control The IASB suggests bringing control into the standard as the sole basis for consolidation that applies to all businesses and bringing it into line with IFRS 10. As a further simplification of the control model, the IASB proposes to keep the rebuttable presumption that control exists when an investor possesses more than a majority of the voting rights of an investee.
Fair value measurement The IASB proposes aligning the standard with IFRS 13.
Revenue from contracts with customers The IASB suggests harmonizing the standard with the IFRS 15 language and guiding principles. The proposed updated criteria are based on the five-step IFRS 15 model, with simplifications that preserve the fundamental IFRS 15 revenue recognition principles.
Joint control The IASB suggests harmonizing the term “joint control” and maintaining the classifications of “joint arrangement” as “jointly controlled assets,” “jointly controlled operation,” or “jointly controlled entity,” as well as the associated measurement standards.

Comment deadline and next steps

Comments on IASB/ED/2022/1 Third edition of the IFRS for SMEs Accounting Standard close on 7 March 2023.
The IASB will consider the comments it receives on the proposals and will then decide whether to proceed with any of the suggested amendments to the IFRS for SMEs.