Adoption of IFRS for SMEs in Albania

Abstract

Small Medium-Sized Enterprises (SMEs) is one of the most important engines of economic growth in Albania. They make a significant contribution to local and global trade and also to the national economic development. SMEs have the largest proportion of total Albanian employment, almost 78% of the total number of employed people. They generally face difficulties in financing and investing decisions, globalization, and other matters, mainly because of their inappropriate formal financial reports. These enterprises must prepare adequate financial statements and proper accounts to deal with third parties’ needs and ensure stakeholder’s confidence. This requires financial statements to be prepared by international financial reporting standards (IFRS), national accounting standards, and local government laws. Therefore, the International Accounting Standards Board (IASB) provided a new standard to ensure the required financial reporting quality for SMEs. The main focus of this study is to examine the attitudes of financial statement’s information’ users in Albania towards the adoption of this financial reporting standard for SMEs as progress on the general financial reporting process in Albania, and also to estimate their capabilities and interests on this matter.

Exploring regional variations in the adoption of International Financial Reporting Standard for Small and Medium Sized Entities: A structured review

“…Literature on IFRS for SMEs reveal advantages of adopting the IFRS for SMEs, most of these benefits are actually in tandem to the benefits enjoyed by listed companies which applies full IFRS such as enhanced reliability, transparency and comparability of financial statements (Kılıç, et al, 2014;Uyar & Güngörmüş, 2013;Albu, et al, 2013;Siam & Rahahleh, 2010). In the Dominican Republic and El Salvador, Sassi & Damak-Ayadi (2021 find a positive association between IFRS for SMEs adoption, corporate governance index and quality financial statements (Gjoni, et al, 2021). These findings by previous authors are encouraging in that they give investors and other interested stakeholders hope and improved confidence regarding financial statements of SMEs.…”

“…Implementation of IFRS for SMEs enhances financial statement user confidence (Bunea-Bontas, et al, 2011), and this in turn leads to improved access to capital (Mawutor, et al, 2019;Gjoni, et al, 2021;Guti & Cheresai, 2023), improved financial reporting and improved national comparability of business results (Mage, 2010). In most instances all providers of capital require accountability, adoption of IFRS for SMEs enhances this accountability, in the long term this can lead to an improvement in the growth potential of economies as SMEs are considered as vital growth engines of economies (Samujh & Devi, 2015).…”