International Financial Reporting Standards And Firm Performance Among Small And Medium Enterprises In Ghana

Abstract

The study examined IFRSs adoption and SMEs performance in Ghana. The study uses survey and cross-sectional research designs and is quantitative and non-experimental. All SMEs in Ghana formed the population. The data collection tool was a structured questionnaire. Technique for stratified sampling was used to select 384 respondents. Ordinary Least Squares was used as the analysis technique. The study found inadequate skills to implement IFRSs, costly nature of IFRSs, complaints by users of financial statements in terms of IFRSs being complicated and inadequate and inexperience staff as factors affecting IFRs adoption by SMEs in Ghana. The study found that SMEs in Ghana adopt IFRSs in preparing financial statements, know the various types of IFRS used in preparing financial statements, use accrual bases IFRSs to present financial statements, have systems in place to practice IFRSs, and appraise the accounting department on IFRSs adoption. However, due to the challenges that prevail, they are unable to adopt it as expected. The study found no significant relationship between the number of employees and IFRSs adoption. Finally, the study found statistically insignificant positive effect of IFRSs adoption on SMEs performance. The study recommends management of SMEs should consider training accounting staff to have the experience to practice IFRSs. They should prepare the financial statements to include all necessary information and detailed notes to the financial statements to enhance the understandability of the financial statements by the users. Moreover, the Institute of Chartered Accountants should organise training programmes for management of SMEs on the need for IFRSs implementation. The institute should educate SMEs on IFRSs applicable to their firms and how to prepare financial statements with those IFRSs to improve reporting quality.