2nd International Conference on Economics, Finance and Management Outlooks 20-21 December, 2014 Pearl International Hotel, Kuala Lumpur, Malaysia

1. Abstract of Economics, Finance and Management Outlooks, 2014, Vol.2
DOI: 10.18488/journal.1003/2014.2/1003.2
2nd
International Conference on Economics, Finance
and Management Outlooks
20-21 December, 2014
Pearl International Hotel, Kuala Lumpur, Malaysia
Conference Website: www.pakrdw.com
17
Paper ID: 88/14/2
nd
ICEFMO
Benefit or Burden: Should Asean Countries Adopt Global
Accounting Standards for SMEs?
R. Helen Samujh1
--- S. Susela Devi2
1
University of Waikato, Hamilton, New Zealand
2
Unitar International University, Kuala Lumpur, Malaysia
Abstract
The purpose of this paper to examine the applicability of the IFRS for SMEs to ASEAN
members: Is the IFRS for SMEs appropriate for ASEAN countries? Is the IFRS for
SMEs likely to create burdens or benefits for Entrepreneurs? Does the IFRS for SMEs
accommodate the differing cultures, ways of doing business, regulatory frameworks,
and underlying philosophies of the member countries? In their efforts to assist
accountability for SMEs globally, the International Accounting Standards Board issued
the Exposure Draft: International Financial Reporting Standards for Small and Medium
sized Enterprises (IFRS for SMEs) in 2007. Two countries from the Association of South
East Asian Nations (ASEAN) are amongst the 66 jurisdictions to state they would adopt
the IFRS for SMEs. It was not surprising Singapore has adopted the standard, and
Malaysia is progressing towards adoption, as both countries have the advantages of
being relatively wealthy, have established stock exchanges, a British background and
use English as one of their official languages. By contrast, we sense Myanmar may
have felt external pressure to conform. We challenge an assumption that the adoption
of IFRS for SMEs would improve financial records of small businesses and support
entrepreneurs in their goals to survive and thrive. We present a critical perspective on
the claims of suitability for emerging economies, particularly the ASEAN countries. We
examined extent literature, largely reporting experiences from Africa and Europe, on the
implementation of IFRS for SMEs. We also examined documents and press releases
produced by the professional accounting bodies involved in the production and
implementation of the IFRS for SMEs. We find the IFRS for SMEs does not
accommodate the differing cultures, ways of doing business, regulatory frameworks,
underlying philosophies, or many of the needs of users of financial reports from SMEs.
Country specific difficulties exist in addition to inherent problems that come with the
English language, principle-based, and capital market orientated IFRS for SMEs. We
find the IFRS for SMEs is not appropriate for ASEAN countries with
• Social or community centered values,
• Undeveloped business infrastructures,
• Entrepreneurs who are not focussed on global trade, and/or
• Inadequate resources for training for implementation and monitoring of the IFRS
for SMEs for unintended consequences. We conclude the adoption of the IFRS for
SMEs without modifications or exemptions would be burdensome to entrepreneurs and
inappropriate for achieving economic growth targets.We recommend that challenges to
adopting the IFRS for SMEs be researched in each individual jurisdictions considering
adoption. The needs of the users of SME financial reporting, support mechanisations,
infrastructure, regulation and education and training are some aspects needing urgent

2. 18
study. We suggest business informality may increase as entrepreneurs aim to avoid
unnecessary financial reporting requirements. Further, entrepreneurs considering
registration and growing may be deterred from doing so.
Keywords: Accounting standards, Financial reporting, IFRS for SMEs, Developing economies,
convergence, ASEAN countries.
Contribution of Study
This paper is a first to consider implications of adoption of the IFRS for SMEs in South East Asian countries.
We synthesises a scattered literature on the development of the IFRS for SMEs and issues experienced in
implementing the standard. This paper has special relevance to the policy makers, standard setters and regulators,
within emergent economies.