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Namibia’s Financial Reporting Framework Under Spotlight: IFRSs and SMEs Come into Focus
In an effort to harmonize national accounting standards with international best practices, Namibian listed companies have been required to adopt International Financial Reporting Standards (IFRSs) since January 2005. This directive was issued by the Namibian Stock Exchange Act, which mandates all domestic listed firms to comply with IFRSs.
Option for Unlisted Companies
However, unlisted Namibian companies have the option to choose between IFRSs and Namibian Generally Accepted Accounting Principles (GAAP). The country is working towards harmonizing its national GAAP with IFRSs by December 2007.
Adoption of IFRS for SMEs
Meanwhile, the Institute of Chartered Accountants of Namibia has adopted the International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs) for use in the country. This adoption took effect on February 17, 2010, and applies to entities that do not have public accountability.
Eligibility Criteria
According to the IFRS for SMEs resolution, entities falling under certain categories can opt for this framework if they do not have public accountability. These categories include:
- Public companies
- Private companies
- Entities where the founding document or regulation requires compliance with a fair presentation framework
Exceptions
However, entities subject to specific financial reporting frameworks as prescribed by law or regulations cannot apply the IFRS for SMEs, even if they do not have public accountability. Entities whose financial reporting framework is not set out in legal provisions or regulations must assess whether it is appropriate to adopt the IFRS for SMEs.
Benefits of Adoption
The adoption of IFRSs and the IFRS for SMEs in Namibia is expected to bring about greater transparency, consistency, and comparability in financial reporting, ultimately benefiting:
- Investors
- Stakeholders
- The economy as a whole