Abstract:
The sector of Small and Medium Enterprises (SMEs) is said to be the
backbone of all developed and developing nations. In spite of the level of
development, SMEs play a pivotal role to generate economic wellbeing of a
country. The Institute of Chartered Accountants of Sri Lanka (ICASL) adapted
to this IFRS for SMEs to give the benefit of adopting with International
accounting standards for SMEs in Sri Lanka. This Study examines the
compliance with section 23 of SLFRSs for SMEs 2011 in Sri Lanka. The
sample comprised of 15 SMEs which are operating in Gampaha and Colombo
districts in the western province. A self-constructed compliance checklist and
the compliance index were derived to denote the level of compliance among
SMEs for the period of year2013 to 2015. The results revealed that slight
increase of the compliance requirements under section 23 denoting 59%, 60%
and 64% in 2013, 2014 and 2015 respectively. A significant noncompliance
level was found with the general disclosures about revenue (Paragraph 23.30).
Further, results of the study found that selected sample of entities have not
engaged in transactions such as customer loyalty award relating transactions,
exchange of goods during the past three years. The study examined there are
misunderstanding relating to certain criteria of the section by preparers of
financial statements. He study recommends policy makers to establish a
proper monitoring mechanism to monitor the accounting practices and keep
high level of compliance with the applicable accounting standards. Further it
recommends standard setters to increase post investigations on compliance
with accounting standards for SMEs.
