Abstract:
Small and medium-sized enterprises (SMEs) are regarded as the drivers of
economic development across the world. Their reporting needs which were
neglected for so long a time were finally given attention with the introduction
of a simplified accounting standards (IFRS for SMEs). The introduction of this
standalone accounting standards for SMEs was geared towards the objective
of addressing SMEs financial reporting needs and improving the quality of
their financial reporting. To this end, a quasi-experimental study was set up to
examine whether the adoption of the IFRS for SMEs has improved the financial
reporting quality of SMEs in Ghana. A six-year time series analysis was
performed on twenty randomly selected SMEs resulting in 120 years of
observation. Three years (2011, 2012 and 2013) represented the pre-adoption
period while years 2014, 2015 and 2016 represented post adoption period.
Using the current model for assessing financial reporting quality (decision
usefulness model), total quality indexes were derived for each qualitative
characteristic under study. The one-way analysis of variances (ANOVA) was
employed separately for the hypotheses formulated for the study. The study
concluded that, the decision usefulness of SMEs financial reporting has
improved with regards to relevance, verifiability, understandability and
comparability subsequent to the adoption of the IFRS for SMEs. The adoption
of the standard however had no significant effect on the faithful representation
quality of SMEs financial reporting. Policy makers should therefore promote
the firm level adoption of the standard and put in place measures to increase
the level of compliance of the standard so as to increase the quality of financial
reporting of this important sector.
