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Slfrs for sm es circular ,

Deshapriya Senanayake
Deshapriya Senanayake

The Sri Lanka Accounting and Auditing Standards Monitoring Board has developed a Sri Lanka Financial Reporting Standard for Small and Medium Sized Entities (SLFRS for SMEs) to provide a simplified set of accounting standards for non-publicly accountable entities. The SLFRS for SMEs is a self-contained 230-page standard that omits unnecessary topics, only allows simpler accounting policy choices, and significantly reduces disclosure requirements compared to full SLFRSs. It is intended to result in better quality and more understandable financial reporting tailored for the capabilities and needs of small and medium sized entities. The SLFRS for SMEs became applicable for financial periods beginning on or after January 1, 2012.

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TUDOR V.PERERA & COMPANY CHARTERED ACCOUNTANTS CA Sri Lanka has developed and published a separate standard intended to apply to the general purpose financial statements of, and other financial reporting by, entities referred to by a variety of terms, including small and medium-sized entities (SMEs), private entities, and non- publicly accountable entities. That standard is the Sri Lanka Financial Reporting Standard for Small and Medium Sized Entities. (SLFRS for SMEs) The SLFRS for SMEs is a self-contained standard of 230 pages. Compared with full SLFRSs, the SLFRS for SMEs is less complex in a number of ways. Topics not relevant for SMEs are omitted. Examples: earnings per share, interim financial reporting, and segment reporting. Where full SLFRSs allow accounting policy choices, SLFRS for SMEs allows only the easier option. Examples: no option to revalue property, equipment, or intangibles; a cost-depreciation model for investment property unless fair value is readily available without undue cost or effort. Many principles for recognizing and measuring assets, liabilities, income and expenses in full SLFRSs are simplified. Examples: amortize goodwill; expense all borrowing and R&D costs; cost model for associates and jointly- controlled entities; no available- for-sale or held-to-maturity classes of financial assets. Significantly fewer disclosures are required (roughly a 90 per cent reduction). The standard has been written in clear, easily translatable language. Effective Date This Standard becomes applicable for financial periods beginning on or after 1 January 2012. Therefore its first applicable period for Sri Lankan SMEs is for the financial period 2012/2013. Accordingly the date of transition is 1.04.2011 for companies presenting their financial statements as at 31.03.2013.
TUDOR V.PERERA & COMPANY CHARTERED ACCOUNTANTS Description of Small and Medium- Sized Entities (a) Do not have public accountability, and (b) Publish general purpose financial statements for external users. An entity has public accountability if: (a) its debt or equity instruments are traded in a public market, (b) it holds assets in a fiduciary capacity for a broad group of outsiders as one of its primary businesses. This is typically the case for banks. General Purpose Financial Statements: Financial statements directed to the general financial information needs of a wide range of users who are not in a position to demand reports tailored to meet their particular information needs. The SLFRS for SMEs will Result in, Better quality reporting Tailored for the capabilities of small & medium sized companies Tailored for the needs of lenders and creditors Understandability across borders & Above all.., It is Good Financial Reporting Made Simple. Important Disclaimer: This document has been developed as an information resource. It is intended as a guide only and the application of its contents to specific situations will depend on the particular circumstances involved. While every care has been taken in its presentation, no person should act specifically on the basis of the material contained herein without considering and taking professional advice. Contact us: Tudor V. Perera & Company, Chartered Accountants, P.O. Box 1177, 3rd Floor De Mel Building, Chatham Street, Colombo 01. Tel: (011) 232-0639 | Fax: (011) 243-1941 Email: tudorv@sltnet.lk

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Slfrs for sm es circular ,

  • 1. TUDOR V.PERERA & COMPANY CHARTERED ACCOUNTANTS CA Sri Lanka has developed and published a separate standard intended to apply to the general purpose financial statements of, and other financial reporting by, entities referred to by a variety of terms, including small and medium-sized entities (SMEs), private entities, and non- publicly accountable entities. That standard is the Sri Lanka Financial Reporting Standard for Small and Medium Sized Entities. (SLFRS for SMEs) The SLFRS for SMEs is a self-contained standard of 230 pages. Compared with full SLFRSs, the SLFRS for SMEs is less complex in a number of ways. Topics not relevant for SMEs are omitted. Examples: earnings per share, interim financial reporting, and segment reporting. Where full SLFRSs allow accounting policy choices, SLFRS for SMEs allows only the easier option. Examples: no option to revalue property, equipment, or intangibles; a cost-depreciation model for investment property unless fair value is readily available without undue cost or effort. Many principles for recognizing and measuring assets, liabilities, income and expenses in full SLFRSs are simplified. Examples: amortize goodwill; expense all borrowing and R&D costs; cost model for associates and jointly- controlled entities; no available- for-sale or held-to-maturity classes of financial assets. Significantly fewer disclosures are required (roughly a 90 per cent reduction). The standard has been written in clear, easily translatable language. Effective Date This Standard becomes applicable for financial periods beginning on or after 1 January 2012. Therefore its first applicable period for Sri Lankan SMEs is for the financial period 2012/2013. Accordingly the date of transition is 1.04.2011 for companies presenting their financial statements as at 31.03.2013.
  • 2. TUDOR V.PERERA & COMPANY CHARTERED ACCOUNTANTS Description of Small and Medium- Sized Entities (a) Do not have public accountability, and (b) Publish general purpose financial statements for external users. An entity has public accountability if: (a) its debt or equity instruments are traded in a public market, (b) it holds assets in a fiduciary capacity for a broad group of outsiders as one of its primary businesses. This is typically the case for banks. General Purpose Financial Statements: Financial statements directed to the general financial information needs of a wide range of users who are not in a position to demand reports tailored to meet their particular information needs. The SLFRS for SMEs will Result in, Better quality reporting Tailored for the capabilities of small & medium sized companies Tailored for the needs of lenders and creditors Understandability across borders & Above all.., It is Good Financial Reporting Made Simple. Important Disclaimer: This document has been developed as an information resource. It is intended as a guide only and the application of its contents to specific situations will depend on the particular circumstances involved. While every care has been taken in its presentation, no person should act specifically on the basis of the material contained herein without considering and taking professional advice. Contact us: Tudor V. Perera & Company, Chartered Accountants, P.O. Box 1177, 3rd Floor De Mel Building, Chatham Street, Colombo 01. Tel: (011) 232-0639 | Fax: (011) 243-1941 Email: tudorv@sltnet.lk
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