IFRS for SMEs Updates – IASB & FRC Highlights

Editorial Team – [2025] 174 Taxmann.com 1153 (Article)

Global Financial Insights is a weekly feature for the Accounts and Audit Module subscribers of Taxmann.com. It provides you with the latest updates on financial reporting and auditing practices from across the globe. Here is this week’s financial update:

1. IFRS Foundation releases updated educational materials for IFRS for SMEs accounting standard

The IFRS Foundation has announced the release of updated educational materials supporting the revised 2025 IFRS for SMEs Accounting Standard. As part of its commitment to enhancing understanding and application of the Standard, the Foundation is actively updating its comprehensive suite of stand-alone educational modules. Each module corresponds to a specific section of the IFRS for SMEs Accounting Standard and is tailored to assist users in navigating the latest amendments, with a focus on sections that have undergone substantial changes.

These educational modules are invaluable tools for preparers, auditors, educators, and others involved in the application or interpretation of financial statements based on the IFRS for SMEs. Each module includes:

• Requirements – The full text of the relevant Standard section, including transition provisions, accompanied by explanatory notes and practical examples.
• Significant estimates and other judgements – Insights into common estimates and judgements required for applying the Standard to real-world transactions and events.
• Comparison with full IFRS Accounting Standards – A concise summary highlighting key differences between the SME Standard and the corresponding full IFRS Standards.
• Test your knowledge – Multiple-choice questions to reinforce understanding and test knowledge of the section’s content.
• Apply your knowledge – Case studies with solutions that offer practical exercises for applying the Standard effectively.

While these modules serve as an excellent educational resource, users should note that they have not been approved by the International Accounting Standards Board (IASB). These updates mark a significant step in making the IFRS for SMEs Accounting Standard more accessible and practical for global application, particularly for smaller entities seeking simplified but robust financial reporting guidance.

Source – International Financial Reporting Standards

2. May 2025 IASB Update – Key Discussions on Standards and Research Projects

The International Accounting Standards Board (IASB) convened from 19–22 May 2025 to deliberate on several critical research and standard-setting initiatives, as well as issues related to maintenance and consistent application of IFRS Standards. The meeting highlights are as follows:

(a) Research and Standard-setting

• Post-implementation Review of IFRS 16 Leases (Agenda Paper 7) – The Board continued its evaluation of stakeholder feedback on the practical application and effectiveness of IFRS 16 since implementation.
• Rate-regulated Activities (Agenda Paper 9) – Deliberations focused on the accounting model for regulatory assets and liabilities, aiming to enhance transparency in reporting by rate-regulated entities.
• Equity Method (Agenda Paper 13) – The Board assessed feedback from comment letters and outreach on proposed amendments to IAS 28 Investments in Associates and Joint Ventures. No decisions were made during this session.
• Intangible Assets (Agenda Paper 17) – Discussions addressed the objectives and direction of the project to modernise IAS 38 Intangible Assets, focusing on recognised and unrecognised intangible items and the evolving nature of these assets.
• Business Combinations—Disclosures, Goodwill and Impairment (Agenda Paper 18) – The Board explored ways to improve disclosure requirements and the effectiveness of impairment testing in the context of business combinations.
• Statement of Cash Flows and Related Matters (Agenda Paper 20) – The session reviewed potential improvements to the statement of cash flows, including classification, aggregation, and disaggregation of cash flow information.

(b) Maintenance and Consistent Application

• Translation to a Hyperinflationary Presentation Currency (IAS 21) (Agenda Paper 12) – The IASB discussed proposals for financial reporting when an entity presents its financial statements in a hyperinflationary currency, under IAS 21.
• Climate-related and Other Uncertainties in the Financial Statements (Agenda Paper 14) – The Board considered the scope and objectives of a potential project to address challenges in financial reporting related to climate and other emerging uncertainties.

Source – International Financial Reporting Standards

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