Revised IFRS for SMEs – Effective from 1 January 2027
Revised IFRS for SMEs – Effective from 1 January 2027
IFRS for SMEs are designed for entities without public accountability that publish general-purpose financial statements.
IASB has released the third edition of the IFRS for SMEs Accounting Standard, marking the completion of its second comprehensive review. The revised edition enhances alignment with full IFRS Accounting Standards while maintaining a simplified structure. The below targeted modifications have been made to ensure the standard remains proportionate and user-friendly for entities with limited resources.
In addition to the major revisions in Section 23 Revenue from Contracts with Customers to align with IFRS 15, the IASB has postponed aligning lease accounting with IFRS 16 Leases, deferring it to a future review.
|
IFRS for SME - Section 2 |
Revenue from contracts with customers |
|
Conceptual framework - Section 2 has been updated to align with the IASB’s 2018 Conceptual Framework for Financial Reporting, improving the clarity and consistency of financial statements. |
|
|
IFRS for SME - Section 9 |
Consolidated and separate financial statements |
|
Control in consolidation - Section 9 adopts a single model for assessing control, enhancing comparability across entities and simplifying the consolidation process. |
|
|
IFRS for SME - Section 11 |
Financial instruments |
|
Financial instruments - Sections on Basic Financial Instruments and Other Financial Instrument Issues have been merged into a new Section 11, Financial Instruments. This update introduces principles for easier classification, new requirements for financial guarantee contracts, and expanded disclosure obligations. |
|
|
IFRS for SME - Section 12 |
Fair value measurement |
|
Fair value measurement - A new Section 12 has been added, aligning the standard with IFRS 13, Fair Value Measurement. It sets out comprehensive guidelines on fair value measurement and related disclosures, enhancing transparency. |
|
|
IFRS for SME - Section 19 |
Business combination |
|
Business combination - Section 19 has been revised to reflect IFRS 3. This includes an updated definition of a business and refined measurement criteria, offering improved guidance for mergers and acquisitions. |
|
|
IFRS for SME - Section 23 |
Revenue from contract with customers |
|
Revenue recognition - Section 23 now mirrors IFRS 15 with suitable simplifications. A comprehensive five-step model for revenue recognition has been introduced, along with guidance on complex contractual features. |
|
Effective date
The revised IFRS for SMEs Accounting Standard is effective for annual reporting periods starting on or after 1 January 2027, with early adoption permitted.
How we can help
Our expert financial accounting advisory teams bring practical insights and global experience to support your needs. Feel free to contact us for more information.