THE UTILITY OF IFRS FOR SMES IN FINANCIAL COMMUNICATION

The purpose of this paper is to analyze the usefulness of financial statements for small and medium sized companies prepared under IFRS, in comparison with the financial statements under Romanian Accounting Standards. The main research question is whether the financial statements under IFRS could fit better the needs of managers and if these financial statements would be useful for external users. The research methodology consists in analyzing the secondary data available – the previous studies and the international financial reporting standards and in comparing it with the existing mandatory standards for SMEs in Romania. Our study has found that the adoption of international reporting standards has its benefits, but also its drawbacks. Overall, the IFRS for SMEs could improve the opportunity of companies in going abroad, by harmonizing the financial reporting. In addition, we can state that, as globalization is imminent, the International Financial Reporting Standards will become mandatory for both large companies and SMEs, so we can recommend managers to be prepared for the process of adoption.