3.5 Financial Statements complying with IFRS for SMEs.

Financial statements prepared in compliance with IFRS for SMEs (International Financial Reporting Standards for Small and Medium-sized Entities) generally include the following components:

1. Statement of Financial Position (Balance Sheet): This statement presents the financial position of the SME at a specific date. It includes assets, liabilities, and equity. Key items typically found on the statement of financial position include cash and cash equivalents, receivables, inventories, property, plant and equipment, payables, loans and borrowings, and equity.
2. Statement of Comprehensive Income (Income Statement): This statement summarizes the financial performance of the SME over a specific period. It includes revenues, expenses, gains, and losses. Key items typically found on the statement of comprehensive income include sales revenue, cost of sales, operating expenses, finance costs, tax expenses, and net income or loss.
3. Statement of Changes in Equity: This statement shows the changes in the SME’s equity during a specific period. It includes items such as net income or loss, contributions by and distributions to owners, share issuances or repurchases, and other equity-related transactions.
4. Statement of Cash Flows: This statement provides information about the cash inflows and outflows of the SME during a specific period. It categorizes cash flows into operating activities, investing activities, and financing activities. Key items typically found on the statement of cash flows include cash flows from operating activities (such as cash received from customers and payments to suppliers), cash flows from investing activities (such as purchase or sale of property, plant, and equipment), and cash flows from financing activities (such as proceeds from borrowing or repayment of loans).
5. Notes to the Financial Statements: The notes to the financial statements provide additional information and disclosures about specific items on the financial statements. They include explanations of accounting policies, key assumptions and estimates, significant judgments made by management, contingencies, and other relevant information necessary for a complete understanding of the financial statements.

Financial statements prepared in compliance with IFRS for SMEs follow a simplified set of accounting standards specifically tailored for small and medium-sized entities. The standards provide guidance on recognition, measurement, presentation, and disclosure of various financial statement items, taking into account the characteristics and reporting needs of smaller entities.