The need of IFRS and the Problem of adopting it for UK Small and Dissertation

The need of IFRS and the Problem of adopting it for UK Small and Medium Enterprises - Dissertation Example It is tough to bring such a radical change in operational as well as financial aspects for these SME. These radical changes are not without their associated dangers and risks. This research paper tries to elucidate the benefits and the problems of adopting IFRS for SME and provides suggestion of adopting a middle path between benefit and associated risk. Table of Contents Table of Contents 3 CHAPTER I – INTRODUCTION 6 1.1 Background 6 1.2 Research Objective 7 1.3 Research Problem 7 1.5 Research Questions 8 CHAPTER II – LITERATURE REVIEW 9 2.1 Introduction 9 2.2 Theoretical Framework 9 2.2.1 Brief overview of the GAAP for SME 10 2.2.2 Brief overview of IFRS for SME 13 2.2.3 A brief overview of the differences between IFRS and UK GAAP 16 2.2.4 A brief overview of the small and medium scale enterprises in UK 19 CHAPTER III – RESEARCH METHODOLOGY 24 3.1 Sources of Data 24 3.2 Research Design 24 3.3. Construct Validity 25 3.4 Internal Validity 25 3.5 External Validity 25 3.6 Reliability 26 3.7 Administration of Procedure 26 3.8 Research Ethics 26 CHAPTER IV –FINDINGS AND DATA ANALYSIS 27 4.1 The need to change to IFRS from erstwhile accounting standards for UK SMES 27 4.1.1 Reduced cost 27 4.1.2 Less complexity 28 4.1.3 Greater transparency achieved through IFRS 29 4.1.4 Increase in the cross border trading 30 4.1.5 Increased cross border mergers and acquisitions 31 4.1.6 Easier access to capital 32 4.2 The problems associated with adoption of IFRS for UK SME 33 4.2.1 Recording same transacations in different formats 34 4.2.2 Global acconting system and IFRS does not rhyme 35 CHAPTER V – CONCLUSION AND RECOMMENDATION 35 5.1 Conclusion 35 5.2 Recommendations 36 5.3 Limitations of the Study 36 CHAPTER I – INTRODUCTION 1.1 Background In the past few decades both developed and developing countries witnessed an exponential rise in the number of small and medium scale industries. The rise of SMEs is buoyed by the support provided by the entrepreneurs and the banks as well as the financial institutions of these counties. The rise in the number of SME is 5% for all the countries. The small and medium scale enterprises contribute 14% to the GDP in countries like Oman (Arundel and Geuna, 2004). Developed countries and under-developed countries have the power to generate even more contribution of the SMEs towards the country GDP. In the wake of the financial crisis that gripped the whole of Europe starting from Portugal, Italy, Greece, Spain and Switzerland, a huge chunk of the SME in these countries got wiped out. These small and medium scale enterprises operated independently and there are few governing bodies to monitor the activities of the SMEs (Bates, 2004). The government spent a huge chunk of the sovereign money in constructing the framework to support the activities of the SMEs. On the other hand, the government did very little to install any regulatory framework to keep an eye on the financial as well a s operational activities of these enterprises. Although most of the enterprises follow the GAAP principles and procedures but it is felt that current procedures and principle are falling short to contain the incidents of â€Å"window dressing† of the accounting statements. 1.2 Research Objective The research objectives are set to guide the research aims for the research