Comparative Review of Selected Accounting Standards for Small Entities
Purpose: This paper aims to provide a comparative review of selected accounting standards designed for small entities across different jurisdictions, analysing the international IFRS for SME's, British standards (FRS 102, Charities SORP, FRS 105), and New Zealand's Tier 3 and Tier 4 PBE Standards. The study seeks to identify convergences and divergences in regulatory approaches to simplifying financial reporting requirements for smaller entities whilst maintaining credibility and usefulness for stakeholders. Design/Methodology/Approach: The research employs a qualitative comparative analysis methodology, examining selected standards across multiple dimensions including scope, complexity, structural design, and specific simplifications offered. The analysis draws on the framework developed by the Australian Accounting Standards Board's comparative study and incorporates findings from empirical research on small entity accounting practices and regulatory effectiveness. The paper synthesises literature on the theoretical foundations of accounting regulation, the distinctive characteristics of small entities, and international regulatory frameworks for smaller units. Findings: The review reveals significant heterogeneity in regulatory approaches to small entity accounting across jurisdictions. Whilst all analysed standards pursue simplification, they differ substantially in scope and degree of complexity—ranging from the 326-page IFRS for SME's to the 27-29-page New Zealand Tier 4 PBE Standard utilising cash-basis accounting. The analysis identifies that simplification does not necessarily correlate with standard length, but rather reflects tailoring of content to specific entity populations and local regulatory contexts. The study confirms that small entities require tailored regulations accounting for their distinctive features: ownership-management integration, reduced information asymmetry, resource constraints, and internal financing dependence. Empirical evidence demonstrates that financial reporting quality significantly impacts small entities' access to external capital and growth prospects. Practical Implications: The findings provide valuable guidance for jurisdictions modernising their accounting regulations for small entities. The diverse regulatory models presented offer alternative approaches and inspirations for developing contextually appropriate solutions. The research underscores that effective regulation must balance simplification with sufficient transparency to support stakeholder decision-making, particularly regarding access to external financing. Originality/Value: This paper contributes to the comparative accounting regulation literature by systematically analysing contemporary international standards for small entities, providing insights into regulatory pluralism and the diversity of approaches to achieving harmonisation whilst respecting local contexts. The synthesis of theoretical foundations and empirical evidence regarding small entity accounting practices offers value to academics, standard-setters, and policymakers engaged in regulatory development.