Small Medium Enterprise: Demand for Auditing Essay
To be a developed nation, it is important for industries, and the country, as a whole, to achieve global competitiveness. In this respect, the IMP3 has adopted the overall theme ‘Malaysia - Towards Global Competitiveness’ and other countries also working towards on that. Industries must strive for global competitiveness through the transformation and innovation of the manufacturing and services sectors. According to The Small and Medium Industries Development Corporation (SMIDEC) SMEs account for close to 99 % of all the establishments in the manufacturing, services and agricultural sector, provide around 65% of total employment and it is expected that the value added production of SMEs to be around RM120 billion …show more content…
According to (Izedonmi et al., 2003), small medium enterprises are the primary economic units and facilitate the rapid economic growth and development. It is necessary for small medium enterprises (SMEs) to conduct accounting and auditing services as financial and human resources are equally involved in SMEs. This enables the owner of these enterprises have control over their business in terms of financial and non-financial. To achieve control over the business operation, it is essential for the owners to have a good understanding of financial statements and the basic knowledge of accounting record keeping.
Nevertheless, there are few issues on conducting the accounting and auditing in Small Medium Enterprises (SMEs). First and foremost, accounting and auditing standards are becoming more complex recently because of issues involving harmonization and convergence of the standards. In July 2009, the International Accounting Standards Board (IASB) has published the International Financial Reporting Standard (IFRS) for SMEs. This standard is to be applied by the entities which are not publicly accountable and publish financial statements with the general purpose for its external users. However, the IFRS introduced for SMEs are way too complex that requires complicated accounting and reporting regulations, and comprehensive