The impact of the updated sections of IFRS for SMEs on the quality, transparency and comparability of financial reporting of enterprises

Hamid Khalilov

E-Forum Working Papers, 2026, vol. 16, issue 2, 66-79

Abstract: The purpose of this study was to determine the impact of the updated provisions of International Financial Reporting Standards for Small and Medium-sized Enterprises on the quality, transparency, and comparability of financial reporting. The methodology was based on theoretical, normative, and comparative analysis of the updated International Financial Reporting Standards for Small and Medium-sized Enterprises with case-study analysis. It was established that before the update, financial statements could contain material misstatements related to incomplete recognition of liabilities, which at enterprises with a high share of lease transactions could be underestimated by 27-32%. The results showed that harmonisation of the International Financial Reporting Standards for Small and Medium-sized Enterprises with full International Financial Reporting Standards improved the reliability and analytical value of financial information and reduced information asymmetry. A practical assessment was conducted using HECOTEC and Azerişıq Açıq Səhmdar Cəmiyyəti. For HECOTEC, the updated requirements improved the transparency of financial information through enhanced disclosure of accounting estimates, management judgements and economically significant business relationships. Analysis of Azerişıq Açıq Səhmdar Cəmiyyəti’s 2024 financial statements identified impairment losses of AZN 3.0 million, deferred tax liabilities of AZN 98.2 million, exchange-rate effects on cash and cash equivalents of AZN 616 thousand, total liabilities of AZN 841.6 million and equity of AZN 2,779.1 million. These indicators demonstrated the practical significance of the updated requirements for improving the reliability, transparency and comparability of financial reporting. The findings confirmed that the updated provisions improved reporting reliability by reducing distortions in the presentation of liabilities, accounting estimates, financial risks and economically significant relationships

Keywords: harmonisation; disclosure requirements; information asymmetry; corporate governance; decision-making (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:cuc:eforum:v:16:y:2026:i:2:p:66-79

DOI: 10.62763/ef/2.2026.66

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