The Sri Lanka Accounting and Auditing Standards Monitoring Board has developed a Sri Lanka Financial Reporting Standard for Small and Medium Sized Entities (SLFRS for SMEs) to provide a simplified set of accounting standards for non-publicly accountable entities. The SLFRS for SMEs is a self-contained 230-page standard that omits unnecessary topics, only allows simpler accounting policy choices, and significantly reduces disclosure requirements compared to full SLFRSs. It is intended to result in better quality and more understandable financial reporting tailored for the capabilities and needs of small and medium sized entities. The SLFRS for SMEs became applicable for financial periods beginning on or after January 1, 2012.

1. TUDOR V.PERERA & COMPANY
CHARTERED ACCOUNTANTS
CA Sri Lanka has developed and
published a separate standard intended to
apply to the general purpose financial
statements of, and other financial reporting
by, entities referred to by a variety of
terms, including small and medium-sized
entities (SMEs), private entities, and non-
publicly accountable entities. That
standard is the Sri Lanka Financial
Reporting Standard for Small and Medium
Sized Entities. (SLFRS for SMEs)
The SLFRS for SMEs is a self-contained
standard of 230 pages. Compared with full
SLFRSs, the SLFRS for SMEs is less
complex in a number of ways.
 Topics not relevant for SMEs are
omitted. Examples: earnings per
share, interim financial reporting,
and segment reporting.
 Where full SLFRSs allow
accounting policy choices, SLFRS
for SMEs allows only the easier
option. Examples: no option to
revalue property, equipment, or
intangibles; a cost-depreciation
model for investment property
unless fair value is readily
available without undue cost or
effort.
 Many principles for recognizing
and measuring assets, liabilities,
income and expenses in full
SLFRSs are simplified. Examples:
amortize goodwill; expense all
borrowing and R&D costs; cost
model for associates and jointly-
controlled entities; no available-
for-sale or held-to-maturity classes
of financial assets.
 Significantly fewer disclosures are
required (roughly a 90 per cent
reduction).
 The standard has been written in
clear, easily translatable language.
Effective Date
This Standard becomes applicable for
financial periods beginning on or after 1
January 2012.
Therefore its first applicable period for Sri
Lankan SMEs is for the financial period
2012/2013. Accordingly the date of
transition is 1.04.2011 for companies
presenting their financial statements as at
31.03.2013.

2. TUDOR V.PERERA & COMPANY
CHARTERED ACCOUNTANTS
Description of Small and Medium-
Sized Entities
(a) Do not have public accountability,
and
(b) Publish general purpose financial
statements for external users.
An entity has public accountability if:
(a) its debt or equity instruments are traded
in a public market,
(b) it holds assets in a fiduciary capacity
for a broad group of outsiders as one of its
primary businesses. This is typically the
case for banks.
General Purpose Financial Statements:
Financial statements directed to the
general financial information needs of a
wide range of users who are not in a
position to demand reports tailored to meet
their particular information needs.
The SLFRS for SMEs will Result
in,
– Better quality reporting
– Tailored for the capabilities of small &
medium sized companies
– Tailored for the needs of lenders and
creditors
– Understandability across borders
& Above all…..,
It is Good
Financial Reporting
Made Simple.
Important Disclaimer:
This document has been developed as an
information resource. It is intended as a guide only
and the application of its contents to specific
situations will depend on the particular
circumstances involved. While every care has been
taken in its presentation, no person should act
specifically on the basis of the material contained
herein without considering and taking professional
advice.
Contact us:
Tudor V. Perera & Company,
Chartered Accountants,
P.O. Box 1177, 3rd Floor De Mel Building,
Chatham Street,
Colombo 01.
Tel: (011) 232-0639 | Fax: (011) 243-1941
Email: tudorv@sltnet.lk