CA ANZ and CPA Australia have lodged a joint submission to the International Accounting Standards Board's (IASB's) consultation on the content of the third edition of its International Financial Reporting Standards (IFRS) for small and medium-sized enterprises (SMEs) standard (IASB ED 2022–1).

Australia and New Zealand do not adopt this standard. However, the principles and disclosures within it underpin the Tier 2 reduced disclosure regimes in both countries (and are informing the content of the Australian Accounting Standards Board's (AASB's) planned Tier 3 standard in the NFP sector), making it important to monitor changes.  

The submission supports the planned update of the standard, agreeing with the need for revisions to the definition of public accountability but recommending minor modifications to the IASB's proposals. It supports both the plan to implement an incurred loss model for financial instruments, which will be simpler for smaller entities to use and the inclusion of simplified fair value guidance from IFRS 13 Fair Value Measurement. However, based on our members' experience of the adoption of IFRS 16 Leases, it recommends that the IFRS for SMEs requirements for leasing should not be updated for IFRS 16 at this time. It also recommends that the IASB address issues regarding accounting for intangible assets and update the standard for its recent clarifications to the current/non-current liability requirements in IAS 1 Presentation of Financial statements, given their importance and widespread impact.

Finally, it recommends that the IASB continue to review the place of IFRS for SMEs globally to better understand and address and how that might be improved given the number of jurisdictions which adopt IFRS (including Australia and New Zealand) but not IFRS for SMEs.