The document discusses the International Financial Reporting Standard (IFRS) for Small and Medium-sized Entities. It defines SMEs as private entities that publish financial statements for external users but do not have public accountability. The objective of SME financial statements is to provide understandable, relevant, reliable and comparable information. IFRS for SMEs was adopted in Nigeria in January 2014 and is used by SME managers/owners, lenders, tax authorities, and trade creditors. SMEs typically have weak internal controls as they are managed informally by owners. The document also compares Nigerian GAAP and IFRS standards for recognition, measurement and presentation of financial information.

1. IFRS FOR SME
BY A’GANIYU LAWAL B.SC, ACA, ACTI

2. INTERNATIONAL FINANCIAL REPORTING STANDARD (IFRS)
FOR SMALL AND MEDIUM-SIZED ENTITIES
Small and medium-sized entities are entities that:
• (a) do not have public accountability, and
• (b) publish general purpose financial statements for external users.
• Examples of external users include owners who are not involved in
managing the business, existing and potential creditors, and credit rating
agencies.
• A subsidiary whose parent uses full IFRSs, or that is part of a consolidated
group that uses full IFRSs, is not prohibited from using this IFRS in its own
financial statements if that subsidiary by itself does not have public
accountability. If its financial statements are described as conforming to the
IFRS for SMEs, it must comply with all of the provisions of this IFRS.

3. OBJECTIVE OF FINANCIAL STATEMENTS OF
SMALL AND MEDIUM-SIZED ENTITIES
• Understandability
• Relevance
• Materiality
• Reliability
• Substance over form
• Prudence
• Completeness
• Comparability
• Timeliness

4. IFRS FOR SME ADOPTION IN NIGERIA
• 1ST JANUARY 2014

5. USERS OF SMES FINANCIAL REPORTS
•Management and Owners
•Bankers and Lenders
•Government and Tax Authorities
•SME Agencies
•Trade Creditors and Credit Agencies

6. SME CONTROL ENVIRONMENT
• Most SMEs are managed by the Owner (s)
• Capital provided by owner with support from a few friends or relations.
• Additional financing could be provided by Financial or leasing institutions.
• Employees are largely drawn from families and friends
• Expert manning of positions are usually not very common.
• Implication for internal control is that it is very weak. Oftentimes policies are not
documented
• Documented policies are not strictly followed or applied.
• Most decisions are taken by the owner manager or his key point-person (s).
• Good Sales and Purchases records maintained
• Cash book are maintained for lodgements and withdrawal from the bank.
• Analysis of expenses may be very weak depending on the use-of-cash habit of
the management and direct involvement in the sales and cash collection
process.

7. NIGERIAN
GAAP
STATEMENT OF FINANCIAL
POSITION
INCOME STATEMENT
STATEMENT OF OTHER
COMPREHENSIVE INCOME
STATEMENT OF CASHFLOWS
NIL
ACCOUNTING POLICIES
EXPLANATORY NOTES
NIL
IFRS
 BALANCE SHEET
PROFIT & LOSS ACCOUNT
NIL
STATEMENT OF CASH
FLOWS
VALUE ADDESTATEMENTS
ACCOUNTING POLICIES
EXPLANATORY NOTES
FIVE-YEAR FINANCIAL
STATEMENT SUMMARY
Similarities & Differences in Presentation of
Financial Statements

8. NIGERIAN GAAP
ACCOUNT REEIVABLE
ACCOUNT PAYABLE
INVENTORY
NON CURRENT ASSET
NON CURRENT LIABILITIES
EQUITY
CARRYING VALUE
STATEMENT OF CHANGES
IN EQUITY
NON CONTROLLING
INTEREST
REVENUE
IFRS
 DEBTOR
CREDITOR
STOCK
FIXED ASSET
LONG TERM LIABILITIES
SHAREHOLDER’S FUND
BOOKVALUE
NILL
MINORITY INTEREST
TURNOVER
Similarities & Differences in Presentation of
Financial Statements

9. Except where IFRS 1 contains an exception or an
exemption, an entity must:
The restatement is booked through retained
earnings .
Step 1
Recognise
all
assets&liabil
ities
required to
be
recognised
by IFRS
Step 2
De-
recognise
all assets
and
liabilities not
permitted
by IFRS
Step 3 Step 4
Classify
all items in
accordanc
e with IFRS
Measure
all assets
and
liabilities in
accordanc
e with IFRS

10. ASSETS AND LIABILITIES RECOGNITION
When a company switches to IFRS for the first time, it may have to
recognize additional assets and liabilities for compliance with the
IFRS.
A company cannot make explicit and unreserved statement of
compliance with IFRS in their financial statements if they do not fully
comply in all respects with IFRS i.e. there should not be partial
compliance.
Accounting Entries:
To Recognize an Asset previously written off to the income
statement
Debit relevant Asset
Credit retained Earning
To recognize liability previously written off to income statement.
Debit retained earning
Credit relevant liability account.