If you are a business owner you may be asking your self but why: and what this means to your business.
In this article I wish to highlight the importance of accounting standards and the need to develop a simplified financial reporting framework for SMEs.
Why do we Need Accounting Standards?
You need accounting standards so that financial statements will fairly and consistently describe the financial performance of your business, without the standards, users of financial statements such as commercial banks and other statutory institutions would need to learn the accounting rules of each and every client or company they deal with and comparisons between these companies would be very difficult.
The accounting standards used today conform to the generally accepted accounting principles (GAAP). These principles are called generally accepted for one simple reason. An Authoritative body set the principles and the accounting profession widely accepts these principles as appropriate.
Why Adopt a Simplified Financial Reporting Framework for SMEs?
In 2009 National Budget, the income tax act was amended to provide for all limited companies to include audited financial statements when filing in tax returns.
Any audited financial statements conform to the generally accepted accounting principles this meant that every small to medium business was required to engage a qualified accountant and engage an audit firm to audit their books. This requirement has been strongly argued by a number of stakeholders that it will increase the cost of doing business for SMEs especially start up businesses.
The move by ZICA to engage AMG Global Chartered Accountants to develop and recommend a standard format for financial statements for SMEs will be of great benefit to small business owners.
In addition, adopting a simple format will help small business owners produce financial statements easily with all necessary information requirements using generally accepted accounting principles in a cost effective way.
About the Author:
Fixed Asset Consultant at Prosperity Agencies Limited with over 10 years practical experience in physical verification, bar-coding of assets and fixed asset software implementation +260 211 239859
Let's Get Connected: Linkedin | Facebook | Google Plus
Post a Comment