IFRS for SMEs gets a major update
The International Accounting Standards Board (IASB) has published a significant update to the IFRS for SMEs Accounting Standard, used widely across 85 global jurisdictions.
Next up? A revised IFRS for SMEs taxonomy, a digital twin to the accounting standards. Designed to provide a simplified reporting framework for entities without public accountability, the Standard balances the needs of lenders and investors with the practical constraints of smaller businesses. This third edition, effective from 1 January 2027 (with early application allowed), is the result of a comprehensive multi-year review aimed at keeping SME reporting relevant while maintaining its simplicity.
The update introduces several key changes. A new revenue recognition model brings the Standard closer to full IFRS, improving comparability while keeping implementation straightforward. Fair value measurement requirements have been consolidated into a single section, reducing complexity. Other refinements include updates to business combinations, consolidations, and financial instruments, ensuring that SMEs can apply modern accounting principles in a practical, scalable way.
Since its initial release in 2009, the IFRS for SMEs Accounting Standard has provided a globally recognised alternative to full IFRS, helping smaller businesses produce high-quality, decision-useful financial statements without excessive compliance costs. At this week’s meeting of the IFRS Taxonomy Consultative Group (ITCG), the IFRS Foundation’s taxonomy team laid out their plans to publish, in line with the Foundation’s Due Process Handbook, the digital twin to the updated SME standards — ie: the XBRL taxonomy.
At XBRL International we are highly supportive of these efforts to further streamline accounting disclosures on a global basis. We wonder what the opportunities for automation and simplification are for software offerings to accountants and small business that span multiple jurisdictions. Food for thought?
Read up on the changes here.
