Johannesburg — THE finalisation of a new set of accounting standards for small businesses is at hand.

The standards, which were developed and refined in SA, are expected to serve as a blueprint for similar initiatives in other countries, Ewald M ü ller, senior executive of standards at the South African Institute of Chartered Accountants (Saica) said last week in Johannesburg.

M ü ller said that the news would be beneficial for budding and existing entrepreneurs. The new standards were expected to contain less-stringent reporting requirements for small businesses. The new framework is also expected to be easier to grasp and apply.

"Against the background of specific research commissioned by Saica and the continuing concern raised by members of various professional associations, practitioners and business owners, a working group had developed a separate set of financial reporting standards, not starting from scratch by any means, rather using work already performed locally and internationally," he said.

"The standards are tailored for entities that do not require general purpose financial statements, including but not limited to owner-managed entities."

He said that the working group would develop a high quality framework for entities not required by law to apply any other framework, or potentially those required by law to apply this framework. The working group consisted of a number of representatives from various institutions and associations, such as Saica, the University of Johannesburg, the Association of Chartered Certified Accountants, the Independent Regulatory Board for Auditors and the South African Revenue Service (SARS).

"The primary users of these financial statements were identified as the owners of the entities, financial institutions and SARS."

The working group had agreed that the outcome would be measured against a number of criteria. For instance, the costs of applying the framework should not exceed the benefits to be derived.

The document should be easy to use and understand; and it should address the majority of transactions and events that a reporting entity may encounter.

Further, the framework must ensure minimal deviation from management accounts, with the least possible adjustments required, he said.

Müller said that the principal benefit of the new accounting standards was that they were cost- effective. They assisted the government's objective of facilitating employment creation. They also created an appropriate standard for reporting, with consistency in terms of accounting application and interpretation, he said.

Further, they enhanced SARS's reliance on reported information.

M ü ller said that an important part of developing the framework was to solicit comment from preparers, auditors, users, the government and other parties who had an interest in the financial reporting framework for non-public entities.