Do you use IFRS, IFRS for SMEs or GAAP for my financial statements?
One of our subscribers, John recently asked a question on the Accounting and Tax Club (accountingandtaxclub.co.za). He has to prepare financial statements for the year ended 28 February 2014 and he needs to comply with the Companies Act. He has deferred tax and doesn't know if he should use IFRS or IFRS for SMEs. Our IFRS expert KC Rottok Chesaina says John has three choices. Let's have a look at what they are...
There are 21 approved amendments to IFRS for SMEs. Do you know how they affect your business?
The long awaited changes to IFRS have been approved and they now affect you.
If you have debtors, creditors, sales, etc. and you don't know about the latest changes, you might account for these incorrectly and end up being held liable for incorrect or incomplete annual financial statements.
Click here so you can find out exactly how these changes affect your business
Here are John's three choices to comply with the Companies Act
Choice # 1: Prepare the financial statements in compliance with South African Statements of Generally Accepted Accounting Practice (SA GAAP). But this is outdated.
Choice # 2: Switch to International Financial Reporting Standards (IFRS) but this really complicates financial statement preparation.
Choice # 3: Prepare the financial statements in compliance with International Financial Reporting Standards for Small and Medium-sized Entities (IFRS for SME's).
KC recommends choice # 3. He says, 'Even large companies are allowed to use the much simpler and Companies Act compliant IFRS for SMEs.
Deferred tax is the only disclosure you have to make with IFRS for SMEs. And you disclose the full tax amount upfront in your balance sheet (Statement of financial position) for future taxes you have to pay or claim.
For other amounts like debtors and creditors, IFRS for SMEs makes financial statements simpler. Because you don't have to disclose these in your financial statements.'
Want to know more about IFRS for SMEs? You can in one day! Join KC as he shows you exactly how to comply with IFRS for SMEs and prepare your Companies Act compliant financial statements. Click here to find out more.
P.S: Book now for the IFRS for SMEs Webinar 2015 and learn how to present and disclose financial statements for IFRS and IFRS for