The IASB’s consultation on its preliminary views on accounting standards for Small and Medium-sized Entities (SMEs) recently closed. The Board supports the concept of the development of global standards for SMEs and hopes that the IASB project will provide a suitable replacement for the FRSSE in due course. The IASB is onsidering the development of standards that are a modified version of each individual IFRS with mandatory fall back to the full IFRS if the SME version does not deal with an accounting issue. And a SME may choose to revert to a treatment in the full IFRS where it differs from that in the corresponding SME standard. Rather than apply a size test for eligibility, the IASB suggests the standards will be available for use by entities which do not have ‘public accountability’.

In its response the Board welcomed the IASB’s initiative and presumption there should be financial reporting standards for SMEs, citing the positive experience of the FRSSE as a precedent in establishing a credible, simplified financial reporting regime for smaller entities.

The Board urged the IASB to develop SME standards that are as concise as possible-the guiding aim should be to achieve a significant reduction in the burden of application of IFRS for entities within the scope of the project and to focus on smaller entities when developing detailed proposals. At the time of going to print the IASB was due to consider the responses to its consultation at its October 2004 meeting. Subject to this, the IASB plans to issue an exposure draft in 2005.

Meanwhile, the Board recently considered the results of its consultation on the ‘one-stop shop’ FRSSE. It agreed that CASE should develop an exposure draft for the FRSSE incorporating the company law requirements and reflecting recent accounting standards. It is hoped to publish the exposure draft by the end of 2004.