Portsmouth Business School

Thesis summary

The vast majority of all profit-orientated enterprises worldwide are small and medium enterprises (SMEs) and the SME sector generates substantial economic and social contributions to the economy. However, the SME sector is diverse and SMEs are not miniatures of large businesses. The application of the same financial reporting requirements as apply to larger entities might cause administrative and compliance burdens for SMEs. One proposed solution of such problems is differentiating the financial reporting requirements for SMEs. This idea, however has been subject to debate for more than a decade. The recent development of a draft International Financial Reporting Standards for Private Entities has generated the worldwide debates again among parties who are involved, directly or indirectly, with it. In particular, the proposed accounting standards might be problematic when applied to very small or micro enterprises, which are the majority of SMEs in both developed and developing countries.

As part of policy to promote SMEs, the Thai government allows non-listed entities, including SMEs to depart from the full financial reporting standards. The International Financial Reporting Standards for Private Entities might be considered as an alternative set of financial reporting standards. Therefore, the appropriateness of this proposed set of financial reporting standards to non-listed Thai SMEs is a practical question for policy to which evidence can contribute. My research study of the financial reporting of non-listed SMEs aims to develop better understanding of SMEs, especially the perceptions of SME stakeholders of the uses and costs of financial reporting, in the context of developing countries.