REPORTING STRUCTURE UNDER SLFRs FOR SMALLER
ENTITIES
SLFRSs and SLFRS for SMEs are too complex for smaller entities and its adoption may not be
cost effective for those entities due to,
•Smaller revenue, equity ,assets, and liabilities
•Access to financial statements being generally restricted to stakeholders who may be in a
position to request for additional information.
Therefore, CA Sri Lanka proposes to adopt a simple financial reporting standard which could be
cost effectively used by smaller Entities. This exposure draft contains the proposed standard,
SLFRS for smaller Entities.
The proposed standard includes, among others, the following simplifications:
a. Complex requirements relating to financial instruments were excluded:
b. Complex requirements relating to fair value, value in use and actuarial valuations were
excluded:
c. Measurement of items were further simplified, for example by excluding overheads from
the cost of inventory, excluding borrowing costs from the cost of assets, retirement
gratuity to be measured at the amount payable if the employees leave on the reporting
date, and cost of leave to be recognised in the period in which leave is taken;
d. Changes in accounting policies and corrections of prior period errors to be presented as
adjustments to retained earnings at the beginning of the reporting period, without the
need to change comparative information;
e. Transition to SLFRS for Smaller Entities has been made easier, by having the transition
date as the beginning of the first reporting period of the financial statements prepaired in
compliance with SLFRS for Smaller Entities;
f. Requirements relating to disclosure substantially reduced;
g. Statement of profit or loss and retained earnings to be presented in place of statement of
comprehensive income and the statement of changes in equity;
h. Not including the statement of cash flows
i. Not including requirements relating to activities and transactions not likely to be carried
out by a smaller entity.
