Recent changes to IFRS and the impact of adoption on GAPSME

Abstract

PURPOSE: The purpose of this study is to critically analyse the differences between the new standards issued by IASB (IFRS15 and IFRS16) and the local GAAP (GAPSME). In Malta, SMEs have the option either to abide by IFRSs as adopted by the EU or adopting GAPSME. This dissertation confirms if differences between IFRSs and GAPSME may influence the choice of adherence to either framework. DESIGN: The research objective was formulated and subsequently, the dissertation was purely based on the qualitative research approach. In total, twelve semi-structured interviews were carried out with companies from the software industry and with companies leasing their office space. Such primary data was analysed in detail and linked with the secondary data to address the objective of the study. FINDINGS: The interviewees disclosed different views regarding the differences between IFRSs and GAPSME and the respective influence on the choice of adherence. In some situations, interviewees favoured IFRSs’ detailed guidance while in other situations, GAPSME was favoured because it requires very few disclosures. Most of the interviewed software companies already implement procedures required by IFRS15. On the other hand, only one of the interviewed companies leasing office space had started preparing for the mandatory implementation of IFRS16. CONCLUSION: Most of the interviewed software companies were not influenced to adhere with either IFRSs or GAPSME because most of the procedures were already under implementation. Most of the companies leasing office space and adopting IFRSs were not aware that they needed to abide by such standard. The study concludes that SMEs need further guidance on IFRSs as adopted by the EU. VALUE: GAPSME was last amended in 2015 and was harmonised with the effective IASs at that time. This dissertation encourages the relevant authorities to reassess the option to harmonise GAPSME with IFRSs as adopted by the EU.