Amendments to IFRS for Small and Medium-sized Entities (SMEs)

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Amendments to IFRS for Small and Medium-sized Entities (SMEs)

The IASB has issued amendments to the IFRS for Small and Medium-sized Entities (IFRS for SMEs), after completing its first comprehensive review of the standard. The objective of the review was to consider implementation experience and developments in full IFRS since IFRS for SMEs was issued in 2009 and make amendments to the standard, if necessary, without adding complexity.

Key changes include:

  1. The alignment of accounting for income taxes and exploration assets with full IFRS;
  2. A new option to use the revaluation model for property, plant and equipment; and
  3. Some new exemptions, supporting guidance and clarification of existing requirements.

In line with the IASB’s objective of retaining simplicity, the new IFRS standards on consolidation, financial instruments, revenue, employee benefits and fair value measurement have not been incorporated into IFRS for SMEs.

The IFRS for SMEs is intended to facilitate financial reporting by small medium-sized entities that want to use international standards by providing an accounting standard suitable for them. It is a simplified and slimmed-down version of full IFRSs tailored for the needs and capabilities of small and medium-sized entities.

The IFRSs for SMEs is a separate stand-alone document organised by topic rather than corresponding to the numbering of full IFRSs. It does not contain cross references to full IFRSs; the only exception is that an entity applying the IFRS for SMEs can choose, for financial instruments, to apply either the provisions of the IFRS for SMEs or the recognition and measurement provisions of IAS 39 and the disclosure requirements of the IFRS for SMEs.

The IFRS for SMEs does not contain an effective date; instead, it will take effect from the date determined by the national regulator in each jurisdiction.

The amendments are effective for annual periods beginning on or after 1 January 2017. Early adoption is permitted, provided that all relevant amendments are applied at the same time.

Amendments to IFRS for Small and Medium-sized Entities (SMEs)

Enhancing the Reliability of Financial Reporting

Internal Control over Financial Reporting (ICFR) is a fundamental component of sound corporate governance for Public Interest Entities (PIEs). It provides reasonable assurance that financial transactions are accurately recorded, authorized, and reported in accordance with applicable accounting standards and regulatory requirements. By embedding effective preventive and detective controls throughout financial processes, ICFR strengthens the integrity, completeness, and accuracy of financial statements, thereby reducing the risk of material misstatements arising from error or fraud.

Driving Investor Confidence and Stakeholder Trust

Reliable financial reporting is critical to maintaining the confidence of investors, regulators, creditors, and other stakeholders. An effective ICFR framework demonstrates management's commitment to transparency, accountability, and financial discipline. This enhances the credibility of published financial information, supports informed decision-making by capital market participants, and reinforces the reputation of PIEs as responsible stewards of public and shareholder resources

Mitigating Regulatory and Compliance Risk

Given the heightened regulatory oversight applicable to Public Interest Entities, robust ICFR plays a vital role in ensuring compliance with financial reporting obligations and governance requirements. Well-designed and effectively operating controls enable organizations to identify and address deficiencies proactively, reduce the likelihood of regulatory breaches, financial penalties, and reputational damage, and support timely remediation where control weaknesses are identified. Ultimately, a strong ICFR framework promotes operational resilience, strengthens governance, and contributes to the long-term sustainability of the organization.

Navigating Nigeria's ICFR Requirements

The Financial Reporting Council (FRC) of Nigeria issued the Guidance on Management Report on Internal Control over Financial Reporting (ICFR) in November 2022, pursuant to Section 7(2)(f) of the Financial Reporting Council of Nigeria Act, 2011 (as amended). The Guidance introduced mandatory annual management assessment and reporting on the effectiveness of Internal Control over Financial Reporting for Public Interest Entities (PIEs), with independent auditor attestation.

CategoryMandatory ICFR Reporting Timeline
Public CompaniesEffective for annual reports beginning 31 December 2023
Other Public Interest Entities (Private PIEs)Effective for annual reports ending on or after 31 December 2024
Government/Public Sector AgenciesOriginally effective for 31 December 2024, with a one-year waiver granted by the FRC. Mandatory submission now applies to 2025 audited financial statements filed in 2026.

How PML Professional Services Supports Your Organization

PML Professional Services provides end-to-end ICFR advisory, implementation, and review services designed to help Public Interest Entities achieve sustainable compliance while strengthening financial governance. Leveraging deep expertise in governance, risk management, internal controls, and financial reporting, our team works collaboratively with management to build an efficient and risk-based ICFR framework aligned with regulatory expectations and internationally recognized leading practices.

Our ICFR service offerings include:

At PML Professional Services, we recognize that ICFR compliance extends beyond meeting regulatory requirements, it is an opportunity to strengthen governance, enhance operational discipline, improve investor confidence, and establish a resilient financial reporting environment capable of supporting long-term organizational growth.