1. SLFRS for SME
The SLFRS for SME is intended to use by Small and Medium Size Entities.
Companies licensed under Banking Act, No 30 of 1988
Companies authorizes under control of insurance Act, No 25 of 1962
Companies carrying on leasing business
Factoring Companies
Factoring companies
Companies registered under Finance Companies Act, No 78 of 1988
Companies licensed under SCE to operate Trusts
Fund management companies
Companies licensed under SCE to carry on business as stock brokers or stock dealers
Companies licensed under SCE to operate Stock Exchanges
Companies listed in the Stock Exchange
Public corporations engaged in sale of goods or provision of services
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2. Description of SMEs Small and medium size entities are entities that:
do not have public accountability; and
Publish general purpose financial statements for external use
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3. How SLFRS for SMEs simplify SLFRSs
Some topics in SLFRSs omitted if irrelevant to SMEs entities
Where SLFRSs have options, include only simpler option
Recognition and measurement simplifications
Reduced disclosures
Simplified drafting
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4. Topics that have been omitted from the SLFRS for SMEs
The SLFRS for SMEs does not address the following topics that are dealt within full SLFRSs, because these topics are not generally relevant to SMEs:
earnings per share;
interim financial reporting;
segment reporting;
assets held for sale;
the revaluation model for property, plant and equipment and intangible assets;
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5. Accounting treatments disallowed under the SLFRS for SMEs
SLFRS for SMEs doesn’t allow the following accounting treatments that are available under full SLFRSs (generally because a simplified method is available to SMEs):
Investment property - If the fair value can be measured reliably, without undue cost or effort, it must use fair value. Otherwise treat them as PPE and use cost model;
Agriculture – use historical cost model unless fair value is readily determinable without undue cost or effort;
Capitalization of borrowing costs;
Capitalization of development costs; and
Deferring actuarial gains/losses of defined benefit plans.
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6. Accounting treatments disallowed under the SLFRS for SMEs
Regarding financial instruments, the Standard drops the ‘available-for-sale’ and ‘held-to-maturity’ categories of LKAS 39, has no fair value option, and has simplified hedge accounting and derecognition requirements.
However, there is a fallback that allows entities to choose to apply LKAS 39 in its entirety instead of the financial instrument requirements in the SLFRS for SMEs. This is the only fallback option to full SLFRSs in the SLFRS for SMEs. It is expected that most SMEs will not choose to apply LKAS 39 due to the additional complexity..
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7. Recognition and measurement simplifications
Goodwill and other indefinite-life intangibles are amortized (But if useful life cannot be reliably estimated, then use 10 years);
A simplified calculation is allowed if measurement of defined benefit pension plan obligations using the projected unit credit method involves undue cost or effort;
The cost model is permitted for investments in associates and joint ventures;
There are no special accounting requirements for assets held for sale.
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8. Comparison of SLFRSs and SLFRSs for SME
Topic/ Area
SLFRS
SLFRS for SME
Scope
Applicable for Specified Business Entities (SBEs)
Applicable for entities that do not have public accountability; and Publish general purpose financial statements for external use.
Financial Statements
Full set of financial statements including SPL&OCI, SFP, SCF, SCE, Notes
Statement of Income and Retained Earnings can be prepared for both SOCI and SCE if certain conditions are met.
Financial Instruments
Four measurement categories: FVTL, HTM, L & R, AFS
Two basic selection: One for basic instruments ( Receivable, payables, etc.) and other for complex financial instruments. Requirements are simplified with Amortized Cost applied with most cases instead of fair value.
Development Cost
Development cost can be capitalized if it meets certain criteria.
All development cost recognizes to P & L as expense I the period they are incurred..

9. Comparison of SLFRSs and SLFRSs for SME
Topic/ Area
SLFRS
SLFRS for SME
PPE
Can use Cost Model or Revaluation Model for measurement subsequent to recognition
Applicable for entities that do not have public accountability; and Publish general purpose financial statements for external use.
Investment Property
Can be recognized at either cost or fair value
If the fair value can be measured reliably, without undue cost or effort, it must use fair value. Otherwise treat them as PPE and use cost model
Borrowing cost
Borrowing cost attributable to qualifying asset can be capitalized.
Borrowing cost can not be capitalized. All borrowing cost recognizes to P & L as expense I the period they are incurred.
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10. Integrated Reporting (IR)

11. concise communication about value performance, prospects
<IR>: A new focus
Integrated Reporting
concise communication about value
Financial
reporting
Other
reporting
strategy, governance,
performance, prospects
<IR> is consistent with developments in financial and other reporting, but an integrated report also differs from other reports and communications in a number of ways. In particular, it focuses on the ability of an organization to create value in the short, medium and long term, and in so doing it:
is a concise communication about how an organization’s strategy, governance, performance and prospects, in the context of its external environment, lead to the creation of value over the short, medium and long term.
Has a combined emphasis on conciseness, strategic focus and future orientation, the connectivity of information, and the capitals and their interdependencies
Emphasizes the importance of integrated thinking within the organization.

12. What is Integrated Reporting
Integrated thinking
Integrated Reporting
Integrated report
The active consideration by an organization of the relationships between its various operating and functional units and the capitals that the organization uses or affects. Integrated thinking leads to integrated decision-making and actions that consider the creation of value over the short, medium and long term.
A process founded on integrated thinking that results in a periodic integrated report by an organization about value creation over time and related communications regarding aspects of value creation.
A concise communication about how an organization’s strategy, governance, performance and prospects, in the context of its external environment, lead to the creation of value in the short, medium and long term.
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13. Integrated Reporting Framework
Fundamental Concepts
Guiding Principles
Content Elements
Fundamental concepts that explain the foundations or conceptual underpinning of IR.
Guiding Principles that inform the content of an integrated report and how information in the report is presented, and
Content Elements, which are essentially categories of information that are to be included in an integrated report.
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14. Fundamental Concepts Value creation for the organization and others
The ability of an organization to create value for itself is linked to the value it creates for others. This happens through a wide range of activities, interactions, and relationships in addition to those, such as sales to customers, that are directly associated with changes in financial capital. These include, for example, the effects of the organization’s business activities and outputs on customer satisfaction, organisational reputation, imposition of supply chain requirement and initiative with business partners.
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15. Fundamental Concepts (b) The Capital
The organizations depends on various forms of capital for their success and those should be considered when preparing integrated reporting.
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16. Category of Capital
Description
Financial
The pool of funds available for an organization to use in the production of goods or provision of services and obtained through financing modes such as equity, debt, grants, or funds generated through operations or investments.
Manufactured
Manufactured physical objects that are available to an organization for use in the production of goods or the provision of services.
Intellectual
Organizational, knowledge-based intangibles that provide competitive advantage. This includes (a) intellectual property, such as patents, copyrights, software, rights and licenses and (b) organizational capital such as tacit knowledge, systems, procedures and protocols.
Human
People’s competencies, capabilities and experience, and their motivations to innovate.
Social and Relationship
The institutions and the relationships within and between communities, groups of stakeholders and other networks, and the ability to share information to enhance individual and collective well-being.
Natural
All renewable and nonrenewable environmental resources (e.g. air, water, land, minerals and forest) and processes (e.g. bio-diversity, eco-system health) that provide goods or services that support the past, current or future prosperity of an organization.

17. Fundamental Concepts (c) The value creation process
This is the linkage between the capital , the business model and ability to create value.
Business model
The Capitals
Value Created
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18. (Outcomes of Business)
External Environment
Capitals
(Inputs to Business)
Society
Organizati on
Financial
Manufactured
Human
Intellectual
Natural
Social and Relationship
(Outcomes of Business)
Business Model
Outputs
Products
Services
Waste
Other by- products
Business Activities
Inputs consumed or transformed
Governance
Strategy
and
resource allocation
Opportunities and
risks
Performance
Future outlook

19. Guiding principles 1. Strategic focus and future orientation
An integrated reporting should provide insight into an entity’s strategy and how it relates to the ability to create value.
2. Connectivity of information
An integrated report should show a holistic picture of the combination, interrelatedness and dependencies between the factors that affects the organisation's ability to crate value over the time .
3 Stakeholder relationships
An integrated report should provide insight into the nature and quality of organisations relationship with its key stakeholders.
Materiality
An integrated report should disclose information about matters that substantively affect the organisation’s ability to create the value over the short, medium and long term.
Conciseness
An integrated report should be concise.
Reliability and completeness
An integrated report should include all material matters, both positive and negative in balanced way and without material error.
7 Consistency and comparability
The information in an integrated report should be presented on a basis that is consistent over the period of time and in a way of comparison with other entities.
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20. The Content Elements Organizational overview and external environment
An integrated report must include the following eight key content elements
Organizational overview and external environment
Governance
Business model
Risks and opportunities
Strategy and resource allocation
Performance
Outlook
Basis of preparation and presentation