EFRAG commented on the 3rd batch of IFRS for SMEs draft Q&As
04 October 2011
EFRAG issued its draft comment letter in response to the third batch of draft Q&As related to the IFRS for SMEs. EFRAG recommends not issuing any of the Q&As. Comments on the letter are invited by 18 November 2011.
The IFRS Foundation’s SME Implementation Group, (SMEIG) which assists the IASB in supporting the implementation of the IFRS for SMEs, published on 28 September 2011 five draft Q&As for public comment.
The first Q&A – Application of the IFRS for SMEs for financial periods ending before the IFRS for SMEs was issued – considers whether an entity can apply the IFRS for SMEs for periods ending before the IASB issued the IFRS for SMEs.
The second Q&A – Interpretation of ‘undue cost or effort’ and ‘impracticable’ - explains how ‘undue cost or effort’ and ‘impracticable’ should be understood.
The third Q&A – Jurisdiction requires fallback to full IFRSs – considers whether an entity that is required to apply (full) IFRSs as a fallback every time a particular transaction, other event or condition are not specifically covered by the IFRS for SMEs, complies with the IFRS for SMEs.
The fourth Q&A – Departure from a principle in the IFRS for SMEs – considers whether an entity that chooses to use a principle that is not allowed under the IFRS for SMEs, but for example under (full) IFRSs, can be described in any way as complying with the IFRS for SMEs.
The fifth Q&A – Prescription of the format of financial statements by local regulation - includes a response to the question on the impact of local requirements to apply certain formats for the financial statements on an entity’s ability to state compliance with the IFRS for SMEs.
EFRAG would recommend not issuing any of the Q&As.
Similar to the concern expressed in EFRAG’s comment letter in response to the second batch of draft Q&As, EFRAG is concerned that the SMEIG is not focusing on a limited number of pervasive issues when issuing Q&As, as specified in its terms of reference and operating procedures.
EFRAG notes that four of the Q&As consider issues on which the requirements of the IFRS for SMEs seem clear, and the answer to the question raised in the last draft Q&A (Interpretation of ‘undue cost or effort’ and ‘impracticable’) always seems to depend on the SME’s specific circumstances and management’s professional judgement.
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