Abstract:

Small and medium-sized companies (SMC) are the mainstay of any country's developed and developing economies. These projects are characterized by their high employment potential and they are the main drivers of further technological innovation, therefore one of the main drivers of economic growth. Given the importance of the role played by SMEs, the International Accounting Standards Board (IASB) issued an international standard for SMEs in 2009 and was amended in 2015, which are the full set of comprehensive IFRS standards designed for trading companies. In light of the tendency of Iraq to adopt international accounting standards, especially since Iraqi banks began in 2016 to apply them, the objective of this research is to identify the extent of the application of the International Financial Reporting Standard for SMEs in the Iraq environment. It also aims to establish the implications of their implementation for the Iraqi economy, especially in attracting foreign investments. The research reached a number of conclusions. The main conclusion indicates that the elements of the transition to the standards of financial reporting for small and medium companies in the Iraqi environment are still incomplete in terms of the availability of the appropriate political environment. The legislative and economic environments are also insufficiently developed for the initiation of this transformation. Another conclusion shows that the unified accounting system applied for small and medium companies has been facing a lot of criticism, as it has become obsolete, despite the amendments in 2011. However, it still does not meet the requirements of international standards. The main recommendation of the research points out the need for radical reforms at various political, legal, economic and regulatory levels in order to create the appropriate atmosphere required by the process of transition to the standard of financial reporting of small and medium enterprises. Another recommendation is for the professional bodies and organization of the profession of accounting and auditing in Iraq (the Office of Financial Supervision, the Association of Accountants and Auditors, the Board of Accounting and Auditing Standards, the Council of the Profession of Auditing) to exercise their real role and to be the leaders in the process of transformation.