11. FUNDAMENTAL OFINTERNATIONAL ACCOUNTING AND FINANCIAL REPORTING STABDARDS WITH IPSAS AND IFRS FOR SME’S

The Fundamentals of International Accounting and Reporting Standards International accounting is the study of accounting principles and practices across different countries. Its primary goal is to harmonize financial reporting worldwide to improve transparency, comparability, and reliability for investors and other stakeholders. Two of the most significant frameworks in this domain are the International Financial Reporting Standards (IFRS) and the International Public Sector Accounting Standards (IPSAS). International Financial Reporting Standards (IFRS) and IFRS for SMEs The International Financial Reporting Standards (IFRS) are a set of accounting rules issued by the International Accounting Standards Board (IASB). They are designed to bring consistency to financial reporting globally, allowing for easy comparison of financial statements from one company to another, regardless of the country they operate in (IASB, 2023). For smaller companies that do not have public accountability, the IASB developed a simplified, self-contained standard known as the IFRS for Small and Medium-sized Entities (SMEs). This standard is a streamlined version of the full IFRS, intended to reduce the reporting burden and cost for smaller companies while still providing useful and high-quality financial information to users (Acs, 2019). It has fewer topics, simpler recognition and measurement principles, and significantly fewer disclosures. International Public Sector Accounting Standards (IPSAS) The International Public Sector Accounting Standards (IPSAS) are a set of accrual-based accounting standards for government and other public sector entities. Issued by the International Public Sector Accounting Standards Board (IPSASB), their main objective is to improve the quality of financial reporting in the public sector globally (IPSASB, 2023). IPSAS enhances transparency and accountability, providing a clearer picture of a government's financial position, including its assets, liabilities, and commitments. IPSAS vs. IFRS While both IPSAS and IFRS are accrual-based and share similar principles, they have key differences. The most fundamental distinction lies in their target audience. IFRS is designed for private sector, profit-oriented entities, focusing on measuring performance and financial position for investors and shareholders. In contrast, IPSAS is tailored for public sector entities, with a focus on public accountability and providing a comprehensive view of a government's finances to taxpayers and citizens (Acs, 2019). Furthermore, IPSAS includes standards for items unique to the public sector, such as non-exchange revenue (like taxes), social benefits, and infrastructure assets, which are not covered by IFRS