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SLFRS FOR SMALLER ENTITIES

Institute of Chartered accountants of Sri Lanka have announced separate set of Standards for smaller entities with effective from 01st January 2016 onward. 

SLFRS for Smaller Entities is a simple financial reporting standard which could be cost effectively used by smaller entities. It could be applied by an entity that is not any of the following:

(a) an entity that had revenue in excess of Rs. 100 million in the reporting period;

(b) an entity that had equity in excess of Rs. 50 million at the end of the previous reporting period;

(c) a company that is required to prepare group financial statements by the law relating to companies; or

(d) an entity that holds assets in a fiduciary capacity as one of its primary businesses.

The 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 the measurement of most leases on a straight line basis, exclusion of overheads from the cost of inventory, exclusion of borrowing costs from the cost of assets, measurement of retirement gratuity at the amount payable if the employees leave on the reporting date, and recognition of the cost of leave 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; xiv

(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 prepared in compliance with SLFRS for Smaller Entities;

(d) requirements relating to disclosure substantially reduced;

(e) 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; and

(f) not including requirements relating to activities and transactions not likely to be carried out by a smaller entity. 

Please visit technical section of CA SRI LANKA website for further information - LINK