The IASB cited the reduction of complexity, easing of compliance costs, enhancement of comparability and credibility, promotion of financial statement relevance, and encouragement of global adoption, among others, as its primary reasons for the initial release of the IFRS for SMEs.
The second edition of the IFRS for SMEs was released by the IASB in 2015, almost a decade ago. The second comprehensive review of the IFRS for SMEs Accounting Standard by the IASB commenced in February of 2019 and culminated in the eventual issue of the third edition of the IFRS for SMEs Accounting Standard during February of 2025. Several re-deliberations, which commenced in June of 2023, formed part of the overall project. The re-deliberations were concluded during September of 2024.
The IFRS for SMEs Accounting Standard – Third Edition
On 27 February 2025, the IASB published the third edition of the IFRS for SMEs Accounting Standard, reflecting improvements that the IASB has made in full. IFRS Accounting Standards which were subject of the scope for the second comprehensive review of the IFRS for SMEs. It should be noted that IFRS 16 Leases did not form part of the scope of the second comprehensive review of the IFRS for SMEs, resulting in the fact that the new requirements for the accounting by lessees of lease agreements, per IFRS 16, will only be considered for inclusion in a future review of the IFRS for SMEs. IFRS 16 Leases requires the lessee, in most cases, to capitalise a right-of-use asset together with a corresponding lease liability on the statement of financial position (balance sheet).
Arguably one of the most significant amendments to the IFRS for SMEs took place in Section 23 in terms of revenue recognition. Currently, the revenue recognition requirements in the IFRS for SMEs stem from IAS 18 Revenue and IAS 11 Construction Contracts. In 2014, the IASB issued IFRS 15 Revenue from Contracts with Customers which replaced IAS 11 and IAS 18. The IASB is now changing the revenue recognition requirements for SMEs by revising Section 23 Revenue of the IFRS for SMEs, so it is based on the principles of full IFRS 15. The Section has been renamed Section 23 Revenue from Contracts with Customers. The main feature of the new Section 23 is the introduction of the five-step revenue recognition model from IFRS 15.
(Table source: www.ifrs.org)
Several other significant and interesting amendments, updates, and improvements have been effected to the IFRS for SMEs in the third edition of the IFRS for SMEs. In short, some of these are:
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Amendments to Section 2 Concepts and Pervasive Principles, aligning this section with the 2018 Conceptual Framework.
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Amendment to the definition of “control” in Section 9 Consolidated and Separate Financial Statements.
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Relocation of the requirements in the previous Section 12 Other Financial Instrument Issues to Section 11 Financial Instruments.
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Introduction of a new Section 12 Fair Value Measurement setting out the requirements for the measurement and disclosure of fair value.
The effective date of the third edition of the IFRS for SMEs Accounting Standard is for periods commencing on or after 1 January 2027, although earlier application of the standard is permitted by the IASB.
Getting to grips with the 2025 IFRS for SMEs (Third Edition)
CPD Campus hosts a two-hour webinar in which the most significant amendments, updates, and improvements to the IFRS for SMEs Accounting Standard are highlighted and explained. The webinar is presented by IFRS expert Anton van Wyk CA(SA).
When: Thursday 24 April 2025
Time: 08h00 to 10h00
Presenter: Anton van Wyk M.Com CA(SA)
If you are interested in attending this webinar, please click HERE to reserve your seat.