Preparedness of Micro, Small and Medium–Scale Enterprises to comply with International Financial Reporting Standards (IFRSs) for SMEs

Abstract

The general objective of this study was to explore the perception of Micro, Small and Medium Scale Enterprises (MSMEs) about International Financial Reporting Standards (IFRS) and their preparedness to comply with IFRS requirements as it involves the preparation of accounts. The research approach follows both the positivist and the critical social research approaches since the adopted research design was the mixed method strategy and employed both quantitative and qualitative methods for analyses. A random sample of 125 respondents from the registry of the Cape Coast Metropolis was used for the study. Structured Questionnaire and interviews were used to obtain the primary data used for the analyses. The results indicated that Most of the Micro Small and Medium Scale Enterprises in the Cape Coast Metropolis lack personal knowledge about bookkeeping and have not heard of IFRS. A number of enterprises resort to traditional methods of bookkeeping such as writing on walls, tables and keeping records in their memories. The interview suggested that the respondents had fully believed in the efficacy of their traditional methods. A relatively higher percentage of the respondents accepted the importance of IFRS adoption in their business but most were of the view that the IFRS processes are hectic to apply. The study recommends that the management of the National Board for Small-Scale Industries (NBSSI) should organise more seminars and conferences to educate their members on the need to keep proper records and adopt international standards such as IFRS for MSMEs.