SMALL and medium-sized enterprises (SMEs) may be allowed to employ a simpler way of reporting financial results than those used by their larger cousins, the listed companies.
All Singapore-incorporated companies have to observe one set of standards at present, but there has been a trend worldwide towards letting smaller companies use different accounting standards.
One reason is that SMEs do not have public shareholders. Parties who need to see SME results, such as banks assessing loans, may need different information from a fund manager investing in large companies.
As accounting standards get more complex, SMEs face spending significant amounts of money to comply with these standards.
Singapore's Accounting Standards Council yesterday issued a consultation paper on the proposals, which would make it less onerous for the SMEs to prepare their financial statements. The council sets accounting standards for companies, charities, co-operatives and societies.
It has asked the business community and other relevant parties to give their views on the issue.
This article was first published in The Straits Times on May 15, 2008
