The perceptions of South African accounting practitioners on the post-implementation of IFRS for SMEs in an institutionalised environment

Abstract

Small and medium-sized entities (SMEs) play a crucial role in the South African economy. The financial reporting framework applicable to SMEs may contribute to the success of the SME. This study was exploratory in nature and followed an interpretive approach to seek an in-depth understanding of the application of the International Financial Reporting Standards for Small and Medium-Sized Entities (IFRS for SMEs) in South Africa.Research purpose: This article explores the perceptions of South African accounting practitioners regarding the post-implementation of the IFRS for SMEs in the South African SME sector.Motivation for the study: South African research on IFRS for SMEs is scarce. This study was designed to contribute to the scarce body of literature on IFRS for SMEs and will benefit both the South African and international accounting profession.Research approach/design and method: In-depth semi-structured interviews with 21 accounting practitioners were carried out during 2017 and 2018. An interpretive approach was adopted to analyse the data into themes providing the insight into the perceptions of South African practitioners. Main findings:Overall, there appears to be an approval of IFRS for SMEs. The uniformity associated with IFRS for SMEs is one of the significant advantages, while factors such as the age of the practitioners, the use of automated software systems and South African legislative requirements affect the relative merit of using the standard.Practical/managerial implications: The use of the interpretive style will assist professional accounting organisations, standard setters and regulators in understanding the various benefits and drawbacks of the IFRS for SME framework. Contribution/value-add:This article is the first to explore the in-depth views of accounting practitioners after IFRS for SMEs was adopted in South Africa. The article also highlights the challenges faced by accounting practitioners in developing economies that service SMEs.

Factors Influencing Voluntary Audit among SME Companies in Malaysia

“…Voluntary audit offers monitoring function, provides assurance to the external users, fulfils the related stakeholder requirement, and as the initiative of the management to improve the internal control and record keeping where 82% of SME companies agreed on the benefits stated (CLRC, 2007). Having the accountability and reporting of financial statements may contribute to the success and sustainability of SME businesses itself (Mohamed, Yasseen, and Omarjee, 2019). Moreover, voluntary audit will reduce the agency problem arising from separation ownership and control that leads to information asymmetries when the agents have greater information than the principals and the conflicts of interest between principals and agents (Seven Pillars Institute, 2018).…”

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

“…Issam & Ibtissam (2023) also notes that political climate and culture influence a country's adoption of the IFRS for SMEs, in this regard they conclude that countries with unfavourable political climate and with a non-Anglo Saxon culture tend to adopt the IFRS for SMEs, their results largely points to characteristics of most developing countries, hence this may explain why most emerging economies are adopting the IFRS for SMEs. Success of internationalisation of accounting standards including the IFRS for SMEs is subject to each country's investor protection and legal enforcement capabilities (Nguyen, 2021;Mohamed, et al, 2019), Jurisdictions that have strong legal systems find it easier to adopt IFRS standards and tend to benefit more from the opportunities offered by adoption of the IFRS for SMEs (Ben Othman & Zeghal, 2010). Moreover, Christensen, et al, (2011) find that countries that invested resources into securities regulation had an admirable track record of enforcing and implementing new EU directives on financial reporting.…”

Transition to the Revised OHADA Law on Accounting and Financial Reporting: Corporate Perceptions of Costs and Benefits

“…Several studies have been carried out in different parts of the world on the benefits of IFRS and on the perception of accounting practitioners on the transition and convergence to the IFRS (Mohamed et al 2019;Dabbicco and Mattei 2020;Albu et al 2020;Ntoung et al 2020;Muraina 2020;Sharairi 2020;Joshi et al 2008;Ionascu et al 2014).…”

“…A study by Mohamed, Yasseen and Omarjee (Mohamed et al 2019) on the perception of South African accounting practitioners on the post-implementation of the IFRS for SMEs in institutionalised environment suggests that the approval of the IFRSs was accepted by all SMEs, and significant advantages were uniformly associated with the IFRS for SMEs. Pallavi Gupta et al (2015) add that accounting experts are optimistic towards the benefits associated with the implementation of the IFRS, while at the same time they are concerned about the significant costs and challenges such as inadequate training of staff, changes required to process, changes in information technology infrastructure and other costs that are associated with the implementation of the IFRS.…”