The Challenges Small and Medium-Sized Entities Face in Adopting and Implementing International Financial Reporting Standards for Small and Medium-Sized Entities: A Case of Windhoek Central Business District

Abstract

The study’s objective was to identify the barriers preventing SMEs in Namibia from adopting and implementing IFRS for SMEs. The research employed a quantitative methodology. A questionnaire with closed-ended questions was utilized to obtain data from respondents. A sample of 169 respondents was drawn from 300 SMEs using a straightforward random sampling technique. The sample size was determined using the Slovin Formula. The was considered adequate for the study. The study finds that SMEs in Namibia are not fully adopting IFRS for SMEs due to a lack of training, the inability to recruit professional accountants due to the high cost of doing so, the lack of experienced employees in SMEs, and the unwillingness of SME owners to reveal their financial transactions to third parties. The further study demonstrates that it is only possible to monitor SMEs’ success if they fully embrace and execute IFRS for SMEs. This is due to the poor maintenance of accounting records, inadequate compilation of financial statements, and the use of inexperienced and underqualified employees in accounting. This report offers regulators and relevant stakeholders a foundation upon which to develop strategies for assisting SMEs to fully embrace and apply IFRS for SMEs for the benefit of the Namibian economy.