With the publication of a standalone standard, such as IFRS for SMEs, the IASB has eased the complexities of financial reporting for millions of entities across the globe. A brief description of the new standard, its differences with the prevailing standards and its Indian perspective have been presented in this article.

Businesses communicate to their stakeholders through their financial results, arrived at by using various sets of recognized reporting framework and standards. Such a practice ensures that reported financial information is credible, universally understood and comparable to businesses, within and across industries. Businesses that do not follow such practices lose their competitive advantage for raising funds at lower interest rates; fail to secure new suppliers, bankers and customers; and also in arriving at an acquisition or cooperative agreements. In order to implement these reporting practices across the globe, the International Accounting Standards Board (IASB) has published International Financial Reporting Standards (IFRS). These standards have gained the status of global financial reporting language in a very short time. However, applying comprehensive financial reporting standards comes with a cost. Businesses need to employ more qualified personnel, new processes and controls, and training right from the accounts receivable clerk, to the financial controller, the CEO and the audit committee members. This is more complicated in case of setting up financial reporting rules for Small and Medium Enterprises, popularly known as SMEs.

Small and Medium Enterprises (SMEs) are regarded as key engines for economic growth, job creation, promotion of exports and entrepreneurial developments in any country. These small entities often run into trouble, not due to the poor quality of products, but due toinadequate funding. They are unable to raise the funds from banks and other financial institutions, especially for their high risk projects. This keeps them out of competition, further weakening the support required for their operations and growth. Often banks ask for collateral representation of entities' financial results. Various governments across the globe, as part of their growth initiative for SMEs, have even reduced barriers on Foreign Direct Investment (FDI) and manufactured exports into SMEs. However, the successful implementation of these initiatives requires transparency in reporting entities that can be brought only by adopting Global Accounting Standards.

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