The effects of international financial reporting standards disclosure for small and medium enterprises (IFRS for SMES) on profitability under the retail sector

College

Ramon V. Del Rosario College of Business

Department/Unit

Accountancy

Document Type

Article

Source Title

Academy of Accounting and Financial Studies Journal

Volume

20

Issue

2

First Page

67

Last Page

73

Publication Date

1-1-2016

Abstract

At the dawn of the 21st century, businesses from all over the globe started crossing geographical boundaries to compete in the international market. Several breakthroughs impacted not only on the firms' ability to generate profits but also their ability to provide accounting information to various stakeholders. As business innovations continue to push through, globalization further necessitated transparency and comparability across entities regardless of geographical location. Hence, the IASB published international standards tailored for established and large corporations. This, however, posed burden to small and medium sized entities. As a proactive response, the IASB subsequently crafted a firm-specific standard now known as the IFRS for SMEs. This set of standards was later adopted by the Philippines and renamed it to PFRS for SMEs. This study determined that on a general level, compliance level among entities in the retail trade industry had increased by adapting the PFRS for SMEs. However, further testing suggests that such increase was insignificant. After assessing the compliance level through testing the disclosure indices, this study tested whether there has been a significant difference on the financial performance of the entities before and after adapting the PFRS for SMEs as evidenced by the entities' financial ratios. The result of the test indicated that there is no significant difference.

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Disciplines

Accounting

Keywords

Financial statements—Standards--Philippines; Small business—Philippines--Accounting

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