IFRS for SMEs | Supporting the Entrepreneur
Converting to an IFRS-friendly system is about more than just your company’s accounts. It also affects many of your daily operations. If you look at it as an opportunity to evaluate and improve certain systems in your business, you might benefit greatly from the changes. Unfortunately, the conversion process and initial reporting phase can be challenging.
Generally, there is confusion about when IFRS or IFRS for SMEs is applicable to a company. Many people believe that a business’ Public Interest Score (PIS) determines this – but this is not correct. The PIS score is calculated by taking certain factors into consideration.
Some of these factors include the number of parties with interests in the company (such as shareholders), total turnover within a financial year, the number of employees, and third-party liabilities at the end of a financial year. According to the Company’s Act, companies only need to apply IFRS if they are state-owned as defined within the Act, or when they are listed on stock exchanges, such as the JSE. Other companies can apply IFRS for SMEs.
Before making a change to your company’s accounting framework, however, there are factors that need to be considered. You should determine whether your Memorandum of Incorporation (MOI) requires you to follow specific accounting guidelines, and further establish whether there is a specific framework required by your shareholders.
Another factor that may play a role is if your company forms part of a group of companies – all of which apply the IFRS framework – then you would most likely need to apply the same framework to ensure uniformity.
How MMS Group Supports IFRS for SMEs
We offer the following:
- We offer to, objectively, evaluate your business’ processes, control systems and deliverables to determine the changes required to meet IFRS requirements
- We offer to assist with the entire IFRS transition, by offering project management support.
- We will provide advice on how to adapt processes, data, manuals, and systems
- We can advise on how to engage with key stakeholders regarding the changes commencing in your business
- Ongoing support
- IFRS reporting
- Assisting with the identification of differences between pre-IFRS accounting systems and the current IFRS system to implement the necessary changes
- Determining what disclosures are required (financial and non-financial)
- Advising on employee benefits
- Supporting clients with valuations and impairment testing