ISLAMABAD: With the aim to bring transparency, accountability and efficiency to the corporate sector, the Securities and Exchange Commission (SECP) has directed the adoption of International Financial Reporting Standards (IFRS) for Small and Medium Sized Entities (SMEs) and Accounting and Financial Reporting Standards for Small Sized Entities (SSEs) as per the requirement of International Organisation of Securities Commission (IOSCO) principles.
The adoption of international financial reporting standards is effective from annual financial periods beginning on or after January 1, 2015.
According to a statement, all the non-listed public limited companies, which includes in the category of SMEs, are required to file their annual financial statements in accordance with the IFRS for SMEs issued by International Accounting Standards Board (IASB).
Similarly, all the Small Size Entities (SSEs) will be required to prepare their accounts, i.e. balance sheet and profit and loss accounts in accordance with Accounting and Financial Reporting Standards for Small Sized Entities (Revised) (AFRS for SSEs) issued by the Institute of Chartered Accountants of Pakistan (ICAP).
The adoption of IFRS for SMEs by the SECP shall enhance the credibility of information by giving additional useful disclosures and comprehensive information. In addition, the public non-listed companies, according to their category, shall either follow the IFRS or IFRS for SMEs only while preparing their annual financial statements. The IOSCO standards require public non-listed companies to prepare their financial statements by using a high and internationally acceptable quality accounting standards.
The SECP has issued the notification approving the revision in existing qualifying criteria of non-listed companies.
