UNCTAD-ISAR Accounting and Financial Reporting Guidelines for SMEs

1. UNCTAD-ISAR Accounting and Financial Reporting Guidelines for SMEs The Exchange – World Bank Amman, Jordan 18 June 2013

2. UNCTAD-ISAR -Accounting by SMEs • Outline: • Introduction to UNCTAD-ISAR • Background to the work on Accounting by SMEs • Main features of the SMEGAs • Follow-up work on the SMEGA Level 3

3. Introduction – UNCTAD-ISAR • ISAR stands for - the Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting. • ECOSOC Resolution 1982/67 • To promote reliable and comparable corporate reporting.

4. Introduction – UNCTAD-ISARcontinued… • Serviced by the United Nations Conference on Trade and Development (UNCTAD) • Held 29 annual sessions so far. • Close to 300 experts from about 90 countries participate at the annual session of ISAR.

5. Importance of the SME Sector • Employment; • Essential goods and services; • Export; and • Tax base.

6. SMEs and Access to Finance Source: Bank Financing for SMEs Around the World, Policy Research Working Paper 4785, World Bank, November 2008.

7. Main obstacles for SME financing Source: Bank Financing to Small and Medium-Sized Enterprises (SMEs) in Colombia, Policy Research Working Paper 4481, World Bank, January 2008.

8. Background – Accounting by SMEs • UNCTAD-ISAR Seventeenth Session - July 2000. • Growing volume of International Accounting Standards • Need for simple, understandable and user-friendly accounting and reporting system designed with SMEs in mind • UNCTAD-ISAR Consultative Group on Accounting by SMEs

9. Categorisation of SMEs Source: Bank Financing to Small and Medium-Sized Enterprises (SMEs) in Colombia, Policy Research Working Paper 4481, World Bank, January 2008.

10. Accounting by SMEs – the approach • Diversity in categorization of SMEs • Qualitative rather than quantitative categorization.

11. Accounting by SMEs – the approach Three-tiered approach: • Public securities or significant public interest; • Significant business enterprises, no public securities, no significant public interest; and • Smallest entities, owner managed, few employees.

12. Accounting by SMEs – the approach… Accounting and reporting requirements by category: • Full set of IFRS; • A condensed set of requirements derived from IAS; and • Simple accruals-based accounting system.

13. Accounting by SMEs – the Guidance

14. Follow-up activities – SMEGA Level 3 Updating SMEGA Level 3: • Twenty-third session (October 2006) revision of SMEGA Level 3 proposed • Completed November 2008 • One of the main changes - an optional cash flow statement .

15. Follow-up activities – SMEGA Level 3 • Training for SME owners and employees- in cooperation with Empretec centers • Research on the current state of accounting and financial reporting needs of SMEs

16. For Further Information: Please visit the ISAR website at: http://www.unctad.org/isar Link to ISAR publications on SMEGAs http://unctad.org/en/Pages/DIAE/ISAR/Financial-Accounting-and-Reporting.aspx

17. Accounting and Financial Reporting Guidelines for SMEs Thank you.