ASRB is that it is future cash flow information which is informative to users, that past cash flows are not relevant, and are a cost.
Riistama & Vehmanen (2004) identified the following as user needs:
- Profitability
- Solvency
- Prior Year Events, and
- Future Prospects.
Company directors, in a study by Collis (2008), were also asked to consider the use of IFRS-SME. The results showed that respondents believed IFRS-SME would be advantageous if it increased international comparability of SME financial reports. The study’s limitation was using company directors to investigate the usefulness of financial reports prepared under IFRS-SME, as directors are not actual users of the accounts.
Discussion of SME reporting standards is ongoing in the US. Cheney (2010) comments that a panel consisting of members from various US accounting bodies will be considering the topic in general and IFRS-SME in particular. They will focus on users and user needs in their considerations. Once again showing that standard setters are conscious of users and user needs. It is imperative that better investigation of user needs be undertaken in countries now using DIFFREP regimes and those countries considering adopting IFRS-SME (including NZ).
According to Pacter, the IASB based IFRS-SME on user needs that they considered important:
- Short term cash flows
- Liquidity, and
- Solvency (Pacter, 2009).
They omitted accounting issues that they did not consider relevant to SMEs:
- Earnings per share
- Interim financial reporting
- Segment reporting
- Reporting in a hyperinflationary environment
- Agricultural assets
- Share-based payments