Is the Adoption of IFRS for SMEs an Added Value for the Financial Reporting in Albania?

Abstract

SMEs play a vital role in the economy of a country. As in the other European countries, in Albania the SMEs represent over 97 % of entities registered in the commercial register. The importance and their contribution to the economy of a country made possible that the international standard setting body, IASB, to devote a special attention to those developing a specific standard aimed to reduce the reporting burdens on these entities. IFRS for SMEs, published in July 2009, it is not mandatory but the adoption of this standard remains a challenge for every country of the world. Most of European countries are still conservative deciding in favor of the application of this standard as prefer their local standards for SMEs. Albania also has its own local accounting standards for such entities, but in circumtances when it aspires to become an EU country, aims to increase foreign investment and tries to incourage doing business in Albania, the adoption of IFRS for SMEs remains a very important decision. The purpose of this paper is to assess whether the adoption of IFRS for SMEs is an added value for financial reporting in Albania. The conclusion will be reached through the evaluation of capability of preparers of financial statements of SMEs, the needs of users of SME financial statements and thecost / benefit analysis.

DOI: 10.5901/ajis.2014.v3n3p371