of 2
All materials on our website are shared by users. If you have any questions about copyright issues, please report us to resolve them. We are always happy to assist you.
Related Documents
  Micro, small and medium enterprises (MSMEs) Definition: Micro, small and medium enterprises (MSMEs) or small and medium-sized businesses (SMBs) are companies whose personnel numbers fall below certain limits. The abbreviation SME is used in the European Union and by international organizations such as the World Bank, the United Nations and the World Trade Organization (WTO). Small enterprises outnumber large companies by a wide margin and also employ many more people. SMEs are also said to be responsible for driving innovation and competition in many economic sectors. A business that maintains revenues or a number of employees below a certain standard. Every country has its own definition of what is considered a small and medium-sized enterprise. In the United States, there is no distinct way to identify SME; it typically it depends on the industry in which the company competes. In the European Union, a small-sized enterprise is a company with fewer than 50 employees, while a medium-sized enterprise is one with fewer than 250 employees As defined in the PFRS for SMEs, the term ‘Small and Medium-sized Entities’ (or SMEs) is not associated  with any size criteria. Small and medium-sized entities are instead defined under the PFRS for SMEs as entities that:    do not have public accountability, and    Publish general purpose financial statements for external users. An entity has public accountability if:    it files, or it is in the process of filing, its financial statements with a securities commission or other regulatory organization for the purpose of issuing any class of instruments in a public market; or    It holds assets in a fiduciary capacity for a broad group of outsiders as one of its primary businesses. This is typically the case for banks, credit unions, insurance companies, securities brokers/dealers, mutual funds and investment banks. Entities holding assets in a fiduciary capacity for reasons incidental to a primary business are not, however, considered to be publicly accountable and, hence, can use the PFRS for SMEs. Examples of where this may be the case are travel or real estate agents, schools, charitable organizations, cooperative enterprises requiring a nominal membership deposit and sellers that receive payment in advance of delivery of goods and services such as utility companies.  Criteria to be consider as MSMEs: The major classification used by most countries to define SMEs is through assets and employment size. However, the size ranges of their classification differ, since developed countries have large industries than the less developed ones. Hence, what might be considered as “small” by developed countries will already fall into the “medium” or “large” category for developing countries like the Philippines. Thus, cross compatibility with other countries for cross country comparison, is sometimes inappropriate or could not be used as basis for a policy recommendation. As mentioned earlier, the above definition of SMEs under the PFRS for SMEs does not include any size criteria. However, the Philippine SEC, in its notice of December 11, 2009 cited earlier, adopted the followin g definition of ‘small and  medium- sized entities’ that includes  size criteria: 1. The entity has total assets of between P3 million and P350 million or total liabilities of between P3 million and P250 million; 2. It is not required to file financial statements under SRC Rule 68.1; 3. It is not in the process of filing its financial statements for the purpose of issuing any class of instruments in a public market; 4. It is not a holder of a secondary license issued by a regulatory agency, such as a bank (all types of banks), an investment house, a finance company, an insurance company, a securities broker/dealer, a mutual fund and a pre-need company; and 5. It is not a public utility. The above SEC definition of SMEs is essentially the same as the definition of NPAEs adopted by the then Accounting Standards Council (now the FRSC) under PAS 101, with the exception of the amounts set for the size criteria. For the definition of SMEs, the size criteria set by the SEC include a floor (P3 million for both total assets and total liabilities) and a ceiling (P350 million for total assets and P250 million for total liabilities). For the definition of NPAEs, the size criteria were pegged at a single amount for total assets (P250 million) and total liabilities (P150 million); there was no ceiling or floor similar to that provided for the definition of SMEs. This difference in size criteria has some implications with regard to the implementation in the Philippines of the PFRS for SMEs, specifically on the matter relating to transition to the PFRS for SMEs. (@Accounting Alert Philippine Financial Reporting Standard for Small and Medium-sized Entities by Punongbayan & Araullo  – First Edition  – Makati City)
Similar documents
We Need Your Support
Thank you for visiting our website and your interest in our free products and services. We are nonprofit website to share and download documents. To the running of this website, we need your help to support us.

Thanks to everyone for your continued support.

No, Thanks