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Accounting for Small and Medium Sized Enterprises in Sweden

Huang, Lirong; Indarti, Lily Budi and Pham, Thi Thanh Hien (2009)
Department of Business Administration
Abstract
The area of measurement principles is considered one of the most controversial aspects of the Exposure Draft for Small and Medium sized enterprises. Although fair value measurement has been mandated for some assets and liabilities under IFRS for SMEs, the issues of when fair value accounting is appropriate and when is not is still far from resolved. Generally, the effect of application of fair value accounting varies among different countries. Based on IASB’s statement and Swedish economic and accounting environment, we find interesting to find out whether the fair value measurement principles in proposed IFRS for SMEs is suitable for companies in Sweden. The investigation will address specific questions about measurement simplifications... (More)
The area of measurement principles is considered one of the most controversial aspects of the Exposure Draft for Small and Medium sized enterprises. Although fair value measurement has been mandated for some assets and liabilities under IFRS for SMEs, the issues of when fair value accounting is appropriate and when is not is still far from resolved. Generally, the effect of application of fair value accounting varies among different countries. Based on IASB’s statement and Swedish economic and accounting environment, we find interesting to find out whether the fair value measurement principles in proposed IFRS for SMEs is suitable for companies in Sweden. The investigation will address specific questions about measurement simplifications that the board adopted on which the Exposure Draft seeks guidance. The main aim of this study is to examine the accounting measurement principles for SMEs under IFRS for SMEs and Swedish accounting standards. We are interested in finding out which measurement principles are suitable for small and medium sized enterprises in Sweden. Using Sweden as the case study, this paper offers data and useful information on the perceptions of internal users on accounting valuation issues and therefore has significant research implications for standard setters and policy makers. The findings from this research could also offer implications on financial reporting issues to countries with similar economic and accounting environment. As the nature of our thesis required direct contacts with our respondents and the fact that our subject considered as difficult for most people, we chose to use the Strategic Approach. This approach offered us with the possibility to work with a small number of respondents, which suited us well given the time limit of this thesis. Based on the character of our thesis, to get an understanding rather than to calculate, we chose to build our research strategy on qualitative interviewing. Of several interview methods that Malcolm Smith (2003)1 depicted, we applied the semi-structured interview which offers researcher to have a list of questions that cover a fairly specific topic. Outgoing from the practical analysis, the conclusion can be drawn that historical cost accounting is more suitable for non public private entities than fair value accounting in Sweden. In addition, most SMEs do not have sufficient accounting knowledge and practices, and they do not have resources for preparing financial statements in compliance with IFRS for SMEs. However, the implementation of historical cost accounting is not without any problems due to difficulties in revenues and expenses matching. In many situations, historical prices become irrelevant in evaluating company’s financial position. (Less)
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author
Huang, Lirong; Indarti, Lily Budi and Pham, Thi Thanh Hien
supervisor
organization
year
type
H1 - Master's Degree (One Year)
subject
keywords
Företagsledning, Management of enterprises, K2 regulations, accounting measurement principles in Sweden, IFRS for SMEs, Fair value accounting, historical cost accounting, management
language
Swedish
id
1626979
date added to LUP
2009-06-05 00:00:00
date last changed
2012-04-02 17:52:59
@misc{1626979,
  abstract     = {The area of measurement principles is considered one of the most controversial aspects of the Exposure Draft for Small and Medium sized enterprises. Although fair value measurement has been mandated for some assets and liabilities under IFRS for SMEs, the issues of when fair value accounting is appropriate and when is not is still far from resolved. Generally, the effect of application of fair value accounting varies among different countries. Based on IASB’s statement and Swedish economic and accounting environment, we find interesting to find out whether the fair value measurement principles in proposed IFRS for SMEs is suitable for companies in Sweden. The investigation will address specific questions about measurement simplifications that the board adopted on which the Exposure Draft seeks guidance. The main aim of this study is to examine the accounting measurement principles for SMEs under IFRS for SMEs and Swedish accounting standards. We are interested in finding out which measurement principles are suitable for small and medium sized enterprises in Sweden. Using Sweden as the case study, this paper offers data and useful information on the perceptions of internal users on accounting valuation issues and therefore has significant research implications for standard setters and policy makers. The findings from this research could also offer implications on financial reporting issues to countries with similar economic and accounting environment. As the nature of our thesis required direct contacts with our respondents and the fact that our subject considered as difficult for most people, we chose to use the Strategic Approach. This approach offered us with the possibility to work with a small number of respondents, which suited us well given the time limit of this thesis. Based on the character of our thesis, to get an understanding rather than to calculate, we chose to build our research strategy on qualitative interviewing. Of several interview methods that Malcolm Smith (2003)1 depicted, we applied the semi-structured interview which offers researcher to have a list of questions that cover a fairly specific topic. Outgoing from the practical analysis, the conclusion can be drawn that historical cost accounting is more suitable for non public private entities than fair value accounting in Sweden. In addition, most SMEs do not have sufficient accounting knowledge and practices, and they do not have resources for preparing financial statements in compliance with IFRS for SMEs. However, the implementation of historical cost accounting is not without any problems due to difficulties in revenues and expenses matching. In many situations, historical prices become irrelevant in evaluating company’s financial position.},
  author       = {Huang, Lirong and Indarti, Lily Budi and Pham, Thi Thanh Hien},
  keyword      = {Företagsledning,Management of enterprises,K2 regulations,accounting measurement principles in Sweden,IFRS for SMEs,Fair value accounting,historical cost accounting,management},
  language     = {swe},
  note         = {Student Paper},
  title        = {Accounting for Small and Medium Sized Enterprises in Sweden},
  year         = {2009},
}