Impact of International Accounting Standards on Small Business Development

Business Project
Contents
TITLE..............................................................................................................................................2
Chapter 1: INTRODUCTION..........................................................................................................2
CHAPTER 2: LITERATURE REVIEW.........................................................................................4
CHAPTER 3: RESEARCH METHODOLOGY.............................................................................9
CHAPTER 4: DATA ANALYSIS................................................................................................11
Discussion......................................................................................................................................18
Conclusion.....................................................................................................................................19
REFERENCES..............................................................................................................................21

TITLE
“Impact of International Accounting Standards on Small Business Development”.
Chapter 1: INTRODUCTION
Overview of research
In accounting world, companies have to apply specific guidelines and principle in order to prepare
essential statements and authentic reports that are known as International Accounting Standards. These
are further replaced by international accounting standard board (IASB) into IFRS international financial
reporting standard (Beaumont, 2015). The concept of IAS was first developed in 1973 by IASC with the
main purpose to compare companies in different part of world, raise transparency and believe in reports
and improve foster international trade and investment. In recent time as economy is becoming more
international and global thus business activities of companies are also expanding. Therefore, they need
for globally accepted framework is greater which help in proper preparation of financial report and
records. These reports must be consistency, comparable, reliable and transparent at global and domestic
level so that meaningful decision are made for improvement. Each kind of organisation either small,
medium or big require accounting standard so that companies would be able to present financial
statements and promote business al global market.
Background of research
RH Amar is one of the best and growing food and grocery distributor and importer in UK. There
are around 68 employees selling around 1200 products and dealing with 40 brands. Company
have effective marketing and distribution channels that use to provide desired food to respective
customer across different part of UK (About RH Amar, 2019). The company is a full-service
distributor and importer, substance skills and expertise in marketing, brand management, sales,
logistics, category management, IT support, food technology and much more. Company use to
represent some most popular UK brands that basically includes Del Monte, Starbucks, Nando’s,
Schwartz, Kikkoman, Crespo, Mutti as well as Kuhne. In the Original Waffle Company brands
which is Cooks & Co, Mary Berry’s.
Rationale of Research
It is observed that work of researcher is reliant on the impact of International accounting standard on
small businesses, thus it is necessary to reduce any error or gap in literature review which enable in
making of proper and described plans to conduct research. This particular work deal with defining the
actual and entire influence of International Accounting Standard on the business of small-medium size
companies. (Brooks and Oikonomou, 2018)
Research Aim

Business project primary aim must be authentic, clear, meaningful and appropriate and which help in
disclosing the suitable results to the topic. The main aim of this research is Impact of international
accounting standards on small business development, a case study on RH Amar
Objective
It is understood that the objective of investigation must be reliable, clear, related and specific to topic so
that meaningful outcome can be ascertained. The certain objective related to the basic aim of business
project is as follows:
 Analyse the concept of international accounting standards.
 To assess and understand the current business environment of small businesses.
 Evaluate the negative as well positive impact of international accounting standards on small
business development.
Research Questions
The main role of researcher is to define the question related to the particular topic selected for
research (Brusca and Martínez, 2016). These question might be abbreviated, clear, related to topic so
that answer can be made as per the requirement. In research study all the specific question is related with
existent aims and objective. The crucial questions are stated below:
1. What is the main concept of international accounting standards?
2. Evaluate the actual and current situation of small businesses in present time?
3. Critically elaborate the negative and positive impact of IAS on functioning small business
development and growth?

CHAPTER 2: LITERATURE REVIEW
The process associated with rational analysis and appropriate evaluation of sensitive data,
supported by credible sources that help decide any lack of basic knowledge and infrastructure. It helps to
evaluate the appropriate knowledge which also helps to increase the study topic's best appropriate output
(Cleary and Quinn, 2016). The analysis of literature also helps to generate a more in-depth knowledge of
the particular subject through appropriate papers, published journals, academic paper, etc. This segment
is considered to be the most important part of the study and is linked to the development of the greatest
thoughts and ideas that could give a quick knowledge of the corresponding research. A literature review is
also described in a specific topic region as information published and in a defined vulnerable region within
a defined period of time. Data was collected through sources such as books, magazines, articles,
scholarly papers, papers in this chapter. In general term, it is defined as the detailed, analyses summary
of the active evidence in context to specific topic area of research.
Analyse the concept of international accounting standards.
According to Robin Jarvis, 2017, regulations for preparing and presenting the financial
statements that were first developed by International Accounting Standards Committee (IASC) in 1973. In
the recent time, the international accounting standard board create accounting standard that were
accepted all over the world which are known as IFRS (IFRS’ Impact on SMEs, 2017). There are
different types of IAS standard that were issued for the purpose of making reports more authentic and
accurate so that they can easily describe the overall image of business. Some common International
accounting standard are IAS1 that are related with presenting of financial statements that was issued in
2007, IAS 2 which was relevant to recording of inventories which was published in 2005, IAS 3 that
relates to consolidation of financial statements, IAS 4 which shows depreciation accounting and many
more. Every Standard have its own importance in context to any business either small or big as it helps
internal managers to sort information in meaningful manner and present to external stakeholder which
makes easy for them to take respective investment decision.
In recent times, around 2001, the board IASB developed the independent standard IRFS having
the main objective:
 To establish single high quality, reliable, high quality, understandable and globally accepted IFRS
standard that are depended upon clear articulated framework. These norms should involve
strong-quality, consistent and similar data in annual reports and other accounting to assist
shareholders, other stakeholders in investment markets as well as other business information
participants in making economic choices.
 Promoting the implementation and strict implementation of these norms.
 To meet the strategies of (1) and (2), take into account the requirements of a variety of sizes and
kinds of organisations in a variety of economic configurations, as applicable.
 Promoting and facilitating the implementation by the Board of IFRS standards and interpretations,
through the happening of international accounting standard and IFRS regulation.

In accounting terms, the IFRS is accounting standard that help to organise and report financial data and
recently it is one of the most necessary accounting standard that is being followed in approx 120 nations.
It generally allows companies to post annual results and define the financial status and strength by
applying the basic concept and rules in order to reduce any fraudulent of manipulation so it makes easy
for external stakeholder to compare and contrast financial outcome for that specific year (Fang, 2015).
Companies mainly implement IFRS for reporting their financial outcome anywhere in the world except few
countries such as the United states as GAAP is the only accounting framework that is used in US. IFRS
primarily cover huge array such as:
 Presentation of financial statements.
 Employee benefits.
 Revenue recognition.
 Borrowing costs.
 Income taxes.
 Investment in subordinate companies.
 Inventories.
 Fixed assets.
 Intangible assets.
 Leases.
 Retirement benefit plans.
 Business combinations.
 Foreign exchange rates.
 Operating segments.
 Recording to consequent events.
 Industry-specific accounting, like mineral and agriculture resources.
The entire concept of IFRS is mainly developed by International accounting standard Board that
use to work closely with expertise from finance department all around the globe which includes analysts,
investor, functionary controller, business leader and responsible accountant that put valuable inputs
(Fields, 2016). There are basically 6 steps of IFRS development these are as follows:
 Fixing the agenda and accounting criteria.
 Effective planning for project.
 Establishing and familiarising exact discussion documents with the aim to define public
consultation.
 Creating and publishing the disclosure draft involving public consequent.
 Publishing and development standard that ease to produce statements.
 Defining a procedure after publishing an IFRS.

To understand the current conditions of small businesses.

In the opinion of Hillary, 2017, small business is defined as the small scale independent business
entity that are mainly controlled, managed and funded by its proprietor. These kind of companies mainly
have small or limited staff, assets and resources as compare with other companies. In this type of
business company owner have to bear or contribute maximum contribution, efforts or capital as they do
not have large number of employee and as a result they have to bear all risk and are entitled to profit.
Company is small in size and willing to expand business in different part of world, thus it is crucial for
internal manager to implement best accounting standard that are accepted at international level (Fischer-
Pauzenberger and Schwaiger, 2017). This would help interested parties to gain the actual position and
financial strength of company during an accounting year and allows them to make investment to attain the
desired profit.
Small business generally has both qualitative and quantitative aspect or criteria such as qualitative criteria
says that proprietor makes important decision own their own as they are not accountable to anyone and
these business have smaller market share at domestic level. On the other side, quantitative variables are
used to define the actual strength of employee, salaries and wages, legal framework, valuation of fixed
assets, share of ownership which is held by management. Small companies are organizations operated
separately that necessitate very little equity, less labour force less or no equipment. These companies are
perfectly suited for small-scale operations to represent a local people and provide earnings to the
shareholders of the company. There are some of the crucial effective characteristic of small companies
that are listed below:
Limited investment: Capital is provided by a person or a tiny set of people in a tiny company. According
to a survey related to low-scale units it is ascertained the majority of tiny businesses are run as sole
ownership and relationship.
Owner management:
These kinds of companies are identified with its owner those are the manager and risk taker. They have
the main work to motivate the employees and make them comfortable to put maximum efforts so that
desired goals can be accomplished (Gitman, Juchau and Flanagan, 2015).
Labour Intensive:
For the most part, small companies are manpower-intensive. Different kinds of small business depend
mainly for their operating on labour. Small businesses' main nature will be more physical job participation
than academic job. The absence of equipment helps handle the activities of the staff manually.
Community Based:
Mainly small company have the main purpose of satisfying the demands and requirement of customer
living in local community. The management use strategies and target smaller demographic areas so that
they can easily make out the actual demand and requirement of clients and produced goods and services
accordantly. As respective company is currently target demographically little area