The differences between HKFRS, HKFRS-Private entity, and HKFRS-SMEs are as follows:
HKFRS (Hong Kong Financial Reporting Standards):
HKFRS consists of 41 distinct accounting standards, 15 financial reporting standards, and several interpretations.
It applies to general purpose financial statements of all profit-oriented entities engaged in commercial, financial, and similar activities.
HKFRS requires the preparation of financial statements that give a true and fair view of the entity's financial position, performance, and cash flows.
It includes topics such as presentation of financial statements, inventories, statement of cash flows, income taxes, etc.
HKFRS-Private entity:
HKFRS for Private Entities is a set of accounting standards issued by the Hong Kong Institute of Certified Public Accountants (HKICPA) for Hong Kong companies that do not have public accountability.
It eliminates some accounting treatments permitted under full HKFRSs, removes topics and disclosure requirements not generally relevant to private entities, and simplifies requirements for recognition and measurement.
It allows private entities to prepare financial statements on a simplified historical cost basis, without fair value measurement or deferred tax.
The disclosure notes in the financial statements of private entities contain less information compared to full financial statements prepared under HKFRS.
HKFRS-SMEs (Financial Reporting Standards for SMEs):
The HKICPA has issued the SME Financial Reporting Framework (SME-FRF) and the Financial Reporting Standard (SME-FRS) specifically for qualifying small and medium-sized entities (SMEs).
SME-FRS is a simplified accounting standard based on HKFRS, tailored to the needs of SMEs.
It consists of 22 accounting standards covering topics such as presentation of financial statements, accounting policies, leases, etc.
Topics such as interim financial reporting, segment reporting, business review, etc. have been omitted in SME-FRS.
SMEs can qualify for reporting exemptions under SME-FRF and SME-FRS if they meet certain criteria, such as obtaining shareholder approval and not engaging in certain types of business activities.
Financial statements prepared under SME-FRF and SME-FRS are exempt from the requirement to give a true and fair view and are prepared on a simplified historical cost basis without fair value measurement or deferred tax.
The disclosure notes in the financial statements of SMEs contain less information compared to full financial statements prepared under HKFRS.
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