5. Discussion and ConclusionsSMEs p

5. Discussion and Conclusions
SMEs play an important role in the global economy, and the associated
accounting issues are under considerable debate, especially following
issuance of IFRS for SMEs in 2009. Our research investigates the
case of emerging economies and stakeholders’ positions vis-a-vis IFRS
for SMEs and its possible implementation in four countries, that is,
the Czech Republic, Hungary, Romania, and Turkey. The first three,
as EU members, have not to date made a decision regarding IFRS for
SMEs. Turkey initially decided to apply IFRS for SMEs starting in
2012, but recently postponed application to 2014, and further evolution
is expected.
We provide evidence that in emerging economies the strong link
between accounting and taxation and the preeminence of the State as
the main user of SMEs financial reporting, superimposed over its
capacity as accounting and tax regulator, may hamper the benefits of
IFRS for SMEs application. The main costs of IFRS for SMEs application
as perceived by interviewees are related to personnel training
and the possible multiplication of reporting systems. The main perceived
benefits include increased comparability (at the international
level), better financial reporting and, ultimately, an improvement of
the business environment (at the national level).
The extant IFRS for SMEs literature mainly focuses on criteria to
be used in determining the scope of IFRS for SMEs (Di Pietra et al.,
2008; Eierle and Haller, 2009). We contribute to this literature by
focusing on various possible approaches to implementation, that is,
mandatory adoption by some SMEs, voluntary adoption, and convergence.
Our analysis of the interviews reveals variation not only by type of
stakeholder but also by country. The Czech Republic and Hungary
manifest stronger support for voluntary adoption than Romania,
where there is less support for this approach. Across the three countries
convergence is the preferred approach. The case of Turkey is also
based on convergence. Interviews indicate a uniform medium support
from all the stakeholders for voluntary adoption, and a strong support
from preparers, professional bodies, and regulators for the convergence
approach. Users however do not support convergence but mandatory
adoption for some SMEs.
We conclude that the business and the accounting environment of
emerging economies, as well as the accounting profession at large,
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© 2013 John Wiley & Sons Ltd
would benefit the most from convergence. Many interviewees do not
perceive the change of the accounting model (i.e., the implementation
of IFRS for SMEs) as a cost or burden, but as a driver of improvements
in the accounting profession. This is seen as an opportunity to
train accountants, to implement better accounting systems in SMEs, to
disclose a higher quality accounting information, and to better the
business environment. This finding is particular to emerging economies,
needing reforms, but also powerful drivers for change.
However, convergence raises some issues. First, convergence may
hamper the medium and long-term compliance with IFRS for SMEs
as issued by IASB and may affect international comparability, which is
the main advocated benefit of the standard’s application worldwide.
While convergence seems the less resisted scenario for emerging economies,
the convergence plan (e.g., training, enforcement mechanisms,
and regulators’ intentions) should be oriented toward the standard’s
full implementation, in accordance with the IFRS Foundation’s constitution.
Specifically, convergence is not an objective in itself but a
means to achieve the adoption of IFRSs (IASC Foundation, 2010).
Second, convergence seems to be the most appropriate scenario for
those emerging countries intending to improve their accounting system,
but also required to comply with EU Directives. The EU’s political
decision not to endorse IFRS for SMEs can impede on the competitiveness
of some of its member states, especially emerging economies,
because many other emerging countries have adopted or plan to adopt
the standard. Also, the requirement to comply with EU Directives in
the national standards may hamper the long-term compliance with
IFRS for SMEs as issued by IASB.
Third, our analysis reveals that convergence has the support of
many groups of stakeholders, but users oppose this approach. This
result implies that convergence moves regulators’ attention from users’
needs (i.e., the IASB’s focus in developing accounting standards) to
preparers’ preferences (e.g., the desire to reduce administrative burden,
the need for education, etc.). This finding from our ex-ante research is
relevant for the decisions of regulators, which should balance the needs
of various stakeholders, but also the country’s political and economic
objectives.
Our research is subject to limitations. The small sample of stakeholders
interviewed restricts generalizability of findings. However,
access to data is problema