The Relevance Of The Adoption Of International Financial Reporting Standards (Ifrs) For Small And Medium-Sized Enterprises (Smes) In Ghana

Abstract

This study was undertaken with the objective of establishing whether or not the IASB goal of IFRS for SMEs been less complex and more beneficial are met. A survey was conducted with accounting officers, owners and managers of SMEs in Kumasi Metropolis. In all there were 155 respondents made up of 19 SME owners, 37 SME managers and 99 SME accounting officers. In this study, multiple linear regression was utilized to analyse the primary data. From the regression results, the adjusted R2 = 78.8%. The findings indicated that the independent variables accounted for 78.8% variance in the dependent variable- SMEs financial reporting. It is revealed from the regression results that benefits derived from IFRS for SMEs, challenges of applying IFRS for SMEs, and relevant financial reporting expertise have influence on the adoption IFRS for SMEs by SMEs for their financial reporting. The study established that benefits derived from adopting IFRS for SMEs includes enhancing comparability of financial statements among firms, promoting high quality, transparent, and uniform financial reporting among firms, and meeting external users’ needs. However, there are some challenges confronting the SME sector for the adoption of IFRS for SMEs such as difficult to understand by SME owners/management and is therefore difficult to apply by them. Hence, there is the need for the SME sector to outsource their financial reporting requirements to independent accountants, which may prove to be expansive. Improving the financial reporting skills of the SME sector may assist in reducing the outsourced accounting costs. More practical hands on training may prove to be more beneficial. The knowledge generated from this research will benefit the SME sector, as well as assist Government and Accounting Regulatory Bodies to provide the necessary IFRS for SMEs support to the SME sector.