Users’ perspective on the usefulness of international financial reporting standards for small and medium-sized enterprises-based financial reports

Dinuja Perera, Parmod Chand and Rajni Mala

Meditari Accountancy Research, 2022, vol. 31, issue 5, 1133-1164

Abstract: Purpose - The International Accounting Standards Board (IASB) has justified the simplification of International Financial Reporting Standards (IFRS) for small- and medium-sized enterprises (SMEs) in several ways, but no effective justification for this simplification has been made based on the information needs of users. This study aims to provide empirical evidence of the decision usefulness of IFRS for SMEs from a prominent user group of SME financial statements – the banks. Design/methodology/approach - This study uses a mixed-method approach. First, a survey was conducted on commercial bank lending officers to assess the usefulness of different disclosure items included in the SME financial statements. Second, semi-structured interviews were conducted with commercial bank lending officers to gain an in-depth insight into the appropriateness and economic consequences of the requirements of IFRS for SMEs on their lending decisions. Findings - The findings show that commercial bank lending officers did not consider all the disclosure requirements presented to them to be equally important. Hence, to facilitate the actual needs of the users’ decision usefulness, it is imperative that when given the opportunity, users participate in the development of accounting standards. Originality/value - The findings of this study will be of interest to accounting regulators for evaluating the successful implementation of IFRS for SMEs and planning the next review of IFRS for SMEs. The IASB and SME Implementation Group are presently considering ways to increase user involvement for the next review of IFRS for SMEs, and the findings of this study signify the need for user involvement in the standard setting process.

Keywords: Bank lending officers; Decision usefulness; Disclosure; IFRS; SMEs; SME lending (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:medarp:medar-03-2020-0809

DOI: 10.1108/MEDAR-03-2020-0809

Access Statistics for this article

Meditari Accountancy Research is currently edited by Prof Charl de Villiers and Warren Maroun

More articles in Meditari Accountancy Research from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().