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TUDOR V.PERERA & COMPANY CHARTERED ACCOUNTANTS CA Sri Lanka has developed and published a separate standard intended to apply to the general purpose financial statements of, and other financial reporting by, entities referred to by a variety of terms, including small and medium-sized entities (SMEs), private entities, and non- publicly accountable entities. That standard is the Sri Lanka Financial Reporting Standard for Small and Medium Sized Entities. (SLFRS for SMEs) The SLFRS for SMEs is a self-contained standard of 230 pages. Compared with full SLFRSs, the SLFRS for SMEs is less complex in a number of ways. Topics not relevant for SMEs are omitted. Examples: earnings per share, interim financial reporting, and segment reporting. Where full SLFRSs allow accounting policy choices, SLFRS for SMEs allows only the easier option. Examples: no option to revalue property, equipment, or intangibles; a cost-depreciation model for investment property unless fair value is readily available without undue cost or effort. Many principles for recognizing and measuring assets, liabilities, income and expenses in full SLFRSs are simplified. Examples: amortize goodwill; expense all borrowing and R&D costs; cost model for associates and jointly- controlled entities; no available- for-sale or held-to-maturity classes of financial assets. Significantly fewer disclosures are required (roughly a 90 per cent reduction). The standard has been written in clear, easily translatable language. Effective Date This Standard becomes applicable for financial periods beginning on or after 1 January 2012. Therefore its first applicable period for Sri Lankan SMEs is for the financial period 2012/2013. Accordingly the date of transition is 1.04.2011 for companies presenting their financial statements as at 31.03.2013.

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Page 1: Slfrs for sm es circular ,

TUDOR V.PERERA & COMPANY CHARTERED ACCOUNTANTS

CA Sri Lanka has developed and

published a separate standard intended to

apply to the general purpose financial

statements of, and other financial reporting

by, entities referred to by a variety of

terms, including small and medium-sized

entities (SMEs), private entities, and non-

publicly accountable entities. That

standard is the Sri Lanka Financial

Reporting Standard for Small and Medium

Sized Entities. (SLFRS for SMEs)

The SLFRS for SMEs is a self-contained

standard of 230 pages. Compared with full

SLFRSs, the SLFRS for SMEs is less

complex in a number of ways.

Topics not relevant for SMEs are

omitted. Examples: earnings per

share, interim financial reporting,

and segment reporting.

Where full SLFRSs allow

accounting policy choices, SLFRS

for SMEs allows only the easier

option. Examples: no option to

revalue property, equipment, or

intangibles; a cost-depreciation

model for investment property

unless fair value is readily

available without undue cost or

effort.

Many principles for recognizing

and measuring assets, liabilities,

income and expenses in full

SLFRSs are simplified. Examples:

amortize goodwill; expense all

borrowing and R&D costs; cost

model for associates and jointly-

controlled entities; no available-

for-sale or held-to-maturity classes

of financial assets.

Significantly fewer disclosures are

required (roughly a 90 per cent

reduction).

The standard has been written in

clear, easily translatable language.

Effective Date

This Standard becomes applicable for

financial periods beginning on or after 1

January 2012.

Therefore its first applicable period for Sri

Lankan SMEs is for the financial period

2012/2013. Accordingly the date of

transition is 1.04.2011 for companies

presenting their financial statements as at

31.03.2013.

Page 2: Slfrs for sm es circular ,

TUDOR V.PERERA & COMPANY CHARTERED ACCOUNTANTS

Description of Small and Medium-

Sized Entities

(a) Do not have public accountability,

and

(b) Publish general purpose financial

statements for external users.

An entity has public accountability if:

(a) its debt or equity instruments are traded

in a public market,

(b) it holds assets in a fiduciary capacity

for a broad group of outsiders as one of its

primary businesses. This is typically the

case for banks.

General Purpose Financial Statements:

Financial statements directed to the

general financial information needs of a

wide range of users who are not in a

position to demand reports tailored to meet

their particular information needs.

The SLFRS for SMEs will Result

in,

– Better quality reporting

– Tailored for the capabilities of small &

medium sized companies

– Tailored for the needs of lenders and

creditors

– Understandability across borders

& Above all…..,

It is Good

Financial Reporting

Made Simple.

Important Disclaimer: This document has been developed as an

information resource. It is intended as a guide only

and the application of its contents to specific

situations will depend on the particular

circumstances involved. While every care has been

taken in its presentation, no person should act

specifically on the basis of the material contained

herein without considering and taking professional advice.

Contact us: Tudor V. Perera & Company, Chartered Accountants,

P.O. Box 1177, 3rd Floor De Mel Building,

Chatham Street,

Colombo 01. Tel: (011) 232-0639 | Fax: (011) 243-1941

Email: [email protected]