INTRODUCTION
The Small and Medium-Sized Enterprises (SMEs) in numerous jurisdictions are attracting enormous attention and also stepped into a global financial reporting arena, as a result, the International Financial Reporting Standard (IFRS) was introduced for SMEs. The International Financial System helps different countries to stimulate their growth and to encourage international investment. Various multinational enterprises have emerged and moved across boundaries more freely and encouraged not only small new enterprises but also the existing firms to locate investment and production in different locations.
The Small and Medium-Sized Enterprises play a vital role in economies of scale and generate numerous employment and income opportunity for the people. Moreover, the SMEs employ more than half of the labor force and play an essential role in the economic recovery of the country. Furthermore, SMEs provide an opportunity for innovation and investment; therefore, many governments considered SMEs an important factor in developing the economies. Many initiatives are used by the Government such as start-up loans and credit guarantee schemes that require entrepreneurs to provide accountability support. However, various international financial issues have been arising, which lead SMEs to face multiple challenges for the survival and growth in the future.
The agencies such as the World Bank and Asian Bank require SMEs to develop standards of financial accountability and encourage adopting IFRS for SMEs developed by the international accountability standard board (IASB). The adoption of IFRS will enhance better transparency, accountability, improve the quality of financial reporting, and balancing financial statement and add to global financial reporting. Moreover, the adoption will lead the SMEs to improve national comparability of business financial results, and improve access to capital. However, this report is about the several developing countries that are not ready to adopt the IFRS for SMS due to lack of investment and resources.
PROBLEM STATEMENT
Many international financial issues arise due to global competition, lack of investment and resources, poor governance and lack of accountability and as a result, incomplete financial records and administrative bottleneck. As a result, many SMEs did not reach their potential growth and contribution to the economy. Moreover, the lack of financial professional in these countries and the effects of the culture influence the financial system in developing countries. Therefore, many agencies require SMEs to adopt IFRS for SMEs issued by the international accountability standard board (IASB).
However, many developing countries have neither the ability to develop their accounting standards nor the economic and technological capacity. Therefore, this report indicates the issues related to the international finance and challenges to implementing IFRS for SMEs. Apart from that, the cost of maintaining the financial standards and implication of adoption needs to be examined. Moreover, this report is about the execution of IFRS for SMEs, therefore, in-depth analysis is required to analyze financial issues in international countries and drive possible solutions and recommendations.
IFRS
International financial reporting standards (IFRS) are a set of accounting standards that lead the company to improve the financial standards, enhance better transparency, accountability, and improve the quality of financial reporting. Moreover, the adoption of IFRS will lead the SMEs to improve national comparability of business financial results, and improve access to capital investment across national boundaries. Furthermore, this increases accountability of the SMEs to reach the potential growth and increase the economy of the country.
Apart from that, it is a common global language of business affairs so that the financial report of the company is understandable and comparable across national boundaries. However, it is difficult to maintain the cost of national standards, especially in developing countries due to lack of resources and capital and poor governance.International Finance Issues Case Solution
ISSUES OF INTERNATIONAL FINANCE
LACK OF PROFESSIONALS
The lack of organized professional staff, resources, and technical expertise in developing countries leads the SMEs to face multiple challenges in managing the international finance reporting. Moreover, lack of education about the implication of IFRS for SMEs and lack of qualified staff to understand the operation of IFRS are also the factors that cause challenges for SMEs. Furthermore, another factor is the lack of an effective human resource department that hires a qualified candidate in a respected field. Apart from that, SMEs in developing countries have a lack of practical knowledge to convert from traditional counting standards to IFRS. The lack of educational training and development for professional accountants also lead the company to face financial problems. These barriers make it difficult for the SMEs to maintain the financial statement and implement IFRS effectively.............
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