Requirements of Small Entities’ Financial Reporting: The Viewpoint of Accounting Professors

Abstract

Objective: In the past few decades, the role of small entities in economies has recieved special attention due to their noticeable performances and supports for big entities’ activities. Ignoring the specific features of these entities in the preparation and presentation of financial statements and their compliance with the accounting standards of large entities have made financial statements of small entities inadequatly appropriate for various users, and imposed high costs on them,. Method: In this research, the views of 111 accounting professors of the Iranian public universities were surveyed through the questionnaire about information requirements for the users of financial statements of small entities. Result: The results of the research showed that according to the respondents, the cost of preparing financial statements by small entities is greater than its benefits, and that the users of these financial statements are unable to make optimal use of information. Also, the information required for the users of financial statements is different from what is currently provided in balance sheets, profit and loss statements, cash flow statements and notes on financial statements. Conclusion: The results of the research imply that it is necessary to simplify the financial reporting system of small entities and develop separate accounting standards for these entities.

Keywords

• accounting standards
• financial reporting
• small entity
• users of financial statements