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In September 2022, the International Accounting Standards Board (IASB) published the Exposure Draft Third edition of the IFRS for SMEs Accounting Standard as part of its second comprehensive review of the Standard.

The Exposure Draft proposes amendments to the IFRS for SMEs Accounting Standard to reflect improvements that have been made in full IFRS Accounting Standards (in the scope of the second comprehensive review) while keeping the Standard simple.

IASB® Update March 2024

The IASB met on 19 March 2024 to redeliberate the proposals in the Exposure Draft Third edition of the IFRS for SMEs Accounting Standard.

Proposed revised Section 23 Revenue from Contracts with Customers—Redeliberation topics (Agenda Paper 30A)

The IASB tentatively decided:

  1. to withdraw the proposal that if any of the circumstances in paragraph 23.38(a)–(c) of the Exposure Draft apply, the SME is a principal; and
  2. to withdraw the proposal to require an SME to account for a warranty as a separate promise if:
    1. the customer has the option to purchase the warranty separately; or
    2. the warranty, or part of the warranty, provides the customer with a service in addition to the assurance that the product complies with agreed-upon specifications.

All 14 IASB members agreed with these decisions.

Instead, the IASB tentatively decided to require an SME:

  1. to apply the requirements based on the principle and indicators of control in IFRS 15 Revenue from Contracts with Customers to determine whether the SME is a principal or agent; and
  2. to account for a warranty as a separate promise only if the customer has the option to purchase the warranty separately.

All 14 IASB members agreed with these decisions.

The IASB tentatively decided:

  1. to require an SME that is evaluating whether a customer obtains control of an asset to consider any agreement to repurchase the asset;
  2. to specify in the IFRS for SMEs Accounting Standard that a customer does not obtain control of an asset if an SME has an obligation or a right to repurchase the asset;
  3. to include no requirements specifying how an SME accounts for repurchase agreements that arise from contracts with customers in the IFRS for SMEs Accounting Standard;
  4. to withdraw the proposed requirements for accounting for unexercised rights in paragraphs 23.119–23.120 of the Exposure Draft;
  5. to confirm its proposal to require an SME to present contract assets and receivables separately; and
  6. to confirm its proposal to require an SME to apply the criteria in paragraph 23.27(a), (c) and (d) of the Exposure Draft to determine whether the SME satisfies a promise over time or at a point in time.

All 14 IASB members agreed with these decisions.

Proposed revised Section 23 Revenue from Contracts with Customers—Additional and alternative simplifications (Agenda Paper 30B)

The IASB tentatively decided to use the term ‘collectability’, instead of ‘customer’s credit risk’, to describe the requirement for an SME to estimate the recoverable amount of assets recognised from the costs incurred to fulfil a contract with a customer.

All 14 IASB members agreed with this decision.

Other issues raised by respondents to the Exposure Draft Third edition of the IFRS for SMEs Accounting Standard (Agenda Paper 30C)

The IASB tentatively decided:

  1. to finalise paragraph 30.8A in the Exposure Draft, which clarifies the requirements for transactions that include payment or receipt of advance consideration in a foreign currency, and to clarify in this paragraph that:
    1. an SME generally recognises a non-monetary asset or non-monetary liability; and
    2. an SME that makes multiple payments or receipts in advance is required to determine a date of the transaction for each payment or receipt.
    All 14 IASB members agreed with this decision.
  2. to align the requirements for offsetting income tax assets and liabilities in Section 29 Income Tax of the IFRS for SMEs Accounting Standard with those in paragraphs 71 and 74 of IAS 12 Income Taxes.
    All 14 IASB members agreed with this decision.
  3. to clarify in paragraph 28.17 of the IFRS for SMEs Accounting Standard that an SME is required to assess the depth of the market for high-quality corporate bonds at a currency level.
    All 14 IASB members agreed with this decision.
  4. to clarify the requirement in proposed paragraph 26.14A of the Exposure Draft by explaining that the cumulative amount ultimately recognised for goods or services received as consideration for cash-settled share-based payments equals the amount of cash paid.
    All 14 IASB members agreed with this decision.

Proposed revised Section 2 Concepts and Pervasive Principles (Agenda Paper 30D)

The IASB tentatively decided to proceed with the proposals in Section 2 of the Exposure Draft and to make changes to these proposals only to improve drafting.

All 14 IASB members agreed with this decision.

Updating the paragraph numbers of the IFRS for SMEs Accounting Standard (Agenda Paper 30E)

The IASB tentatively decided to renumber paragraphs for sections that will be revised and to retain the original paragraph numbers for sections with few amendments.

All 14 IASB members agreed with this decision.  

Next milestone

IFRS for SMEs Accounting Standard