Explaining the Factors Affecting the Adoption of International Financial Reporting Standards for Small and Medium-Sized Enterprises in Iran

Abstract

The conceptual evolution of financial reporting and the associated standards, along with their intersection with international standards, has created a foundation for a new approach, which has posed specific intellectual challenges. Given the crucial role of small and medium-sized enterprises (SMEs) in Iran and the need to focus on their financial reporting, the main objective of this research is to explain the factors influencing the adoption of financial reporting standards specific to SMEs in Iran. This research aims to examine what factors SMEs in Iran consider as influential for adopting specific standards (International Financial Reporting Standards for SMEs). The study was conducted through interviews with experts, preparation of hypothetical financial statements, and a survey using a questionnaire among experts, accounting and auditing standard setters, and scholars. This research is applied in terms of its objective and exploratory in terms of data collection. Based on the model fitting of the factors influencing adoption in Iran, the exploratory analysis model shows that approximately 89% of the identified factors, including presentation and disclosure, reliability, recognition and measurement, and comparability of financial information, can explain the factors influencing the adoption of international financial reporting standards. The results indicate that the most significant impacts on the adoption of international financial reporting standards for SMEs are the reliability and comparability of financial information.