“Small entities”: Should there be different reporting requirements for them?

Stakeholders shared concerns with the Board about the ability of “small entities” to prepare financial statements in accordance with Standards of GRAP. The main reason for their concerns was that small entities have constrained human and financial resources.

What was the Board’s response?

To determine the Board’s possible actions, it was necessary to obtain a clear understanding of the problem. The Board responded by researching the financial reporting environment of these entities in 2018/19 to determine what could be done. The research focussed on:

• Identifying the characteristics that could be used to classify entities as “small”.

Because no definition or description of “small entities” exists in Standards of GRAP, the Board needed to understand what makes an entity small.

• The challenges and issues faced by “small entities” to prepare GRAP financial statements.

The Board published a Research Paper containing the results of the research. More information on the outcomes of the research, as well as the Board’s considerations and conclusions on the project, will be shared in upcoming posts in November.

Where can the Research Paper be accessed?

The Research Paper has been published on the ASB’s website and can be accessed here.

The views expressed in this article are those of Secretariat and not the ASB Board.