CRIEFF Discussion Paper Number 0701
Practitioner Views
on Financial Reporting for Smaller Entities
Gavin C. Reid and Julia A. Smith
Abstract
This paper has four purposes. First, to establish the policy background
leading to a special financial reporting standard for small firms (FRSSE),
aimed at reducing compliance costs. An
indirect policy implication of this was that small firms would be stimulated,
for example, in terms of start-up rate, performance (including survival,
profitability, and growth), and contribution to employment and innovation
within the economy. Second,
to consider the implications for FRSSE itself on compliance costs, and to ask
what forms they may take. Third, to analyse new evidence
on adopters and non-adopters of the FRSSE. Fourth, to cast this new evidence into a cost
effectiveness framework, to judge whether adopters who are engaged in upgrading
of skills, to implement the FRSSE, have attained net benefit, compared to non-adopters,
in so doing. The conclusion is that
significant net benefit has indeed accrued to adopters.
JEL Classifications: G32, M13, M41
Keywords:
Small firms, financial reporting, compliance costs, cost-effectiveness.
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