- Too complex
- Too costly, and
- Lacks relevance.
Again, the responses to the questionnaire are from preparers of SME financial accounts (accountants) not from the users themselves. This is a major limitation of the study. Accountants may believe that full GAAP is time-consuming, costly, etc. However, this does not address the information needs of users, rather the cost concerns of preparers.
The study once again highlights the point that the literature on SME financial report users and user needs is lacking investigation of actual users and what their needs are. Researchers sampling preparers and internal management (e.g., Directors) as proxies for users are not answering the question “What do users want from SME financial reports?”
A US study by de Mesa Graziano (2006) used surveys and limited interviews of financial account preparers and bankers of SMEs (bankers were used as proxy for SME account users). The results showed that the majority of bankers in the survey wanted audited full GAAP compliant accounts. This was because these reports are considered more accurate and to have a higher degree of comparability. This potentially indicates that the main users of SME financial accounts, as identified in numerous other empirical studies (i.e., bankers), do not want a different set of standards applicable to SMEs other than full GAAP. That they disapprove of DIFFREP. However, where banks lend to SMEs they can demand a higher volume of information than is required in general purpose financial reports. As such they are not true general purpose users.
That finding does, however, agree with the response to the Canadian DIFFREP ED from the only SME account user respondent. As noted above, he responded negatively to the Canadian DIFFREP ED because he considered that DIFFREP would reduce comparability (Rennie & Senkow, 2009). So it appears that more investigation into users needs is needed.
de Mesa Graziano (2006) also found that users are more interested in operating data, for example cash flows. This is an interesting finding, and is relevant to IFRS-SME. IFRS-SME requires entities reporting under IFRS-SME to prepare a cash flow statement and reconciliation (IASB, 2009). de Mesa Graziano’s finding suggests that requiring a cash flow statement may be relevant to user needs. However, comment from a member of the NZ