Does IFRS for SMEs Reflect Actual User Needs in Developing Economies? Evidence from Ghana
Keywords:
IFRS for SMEs, Financial reporting, Small and medium-sized enterprises (SMEs), Developing economies, User needs, Stakeholder theoryAbstract
This study examines how SME owners and accountants in Ghana perceive the users of financial information and their information needs. It assesses whether IFRS for SMEs aligns with actual user requirements in a developing economy. A quantitative survey was administered to 1,184 SME owners and accountants in Ghana, yielding 200 usable responses. The managerial branch of stakeholder theory guided the analysis. Non-parametric tests were used to examine differences by firm size. The primary users of SME financial information are owner-managers, banks, and the Ghana Revenue Authority. Owners mainly use financial information for planning, staff compensation, pricing, and performance comparison. The profit and loss statement is the most useful report. Information needs differ significantly by firm size. The study reflects only the views of owners and accountants. Future research should incorporate the perspectives of external users such as banks and tax authorities. The findings offer evidence for the IASB and Ghanaian standard setters on the need to adapt IFRS for SMEs to better reflect local user needs in developing economies. This paper provides new empirical evidence from Ghana and contributes to the limited research on SME financial reporting needs in African developing countries.
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