Financial reporting by small and medium enterprises in Thailand

  • Sutthirat Ploybut

    Student thesis: Doctoral Thesis


    The increasing complexity of financial reporting requirements, especially accounting standards, leads many countries to consider moving to simpler reporting requirements for small and medium enterprises (SMEs) in order to reduce reporting burdens. In response to such concern, the International Accounting Standards Board (IASB) also released the IFRS for SMEs, an international accounting standard intended for SMEs worldwide. In Thailand, SMEs are required by law to prepare and publish general purpose financial statements for statutory reporting, but the Thai financial reporting framework is complex. Thus, it would be beneficial for Thai SMEs if their reporting burdens were reduced. The IFRS for SMEs might be considered as an alternative set of accounting standards in Thailand, so its suitability to Thai SMEs is worth evaluating.

    This present study examines SME reporting in Thailand to ascertain its features and to evaluate its costs and benefits to SME stakeholders. Both qualitative and quantitative approaches are adopted in the study. Semi-structured interviews of SMEs, users and other stakeholders are conducted and the data are analysed using Strauss and Corbin’s grounded theory approach. A questionnaire survey of directors or managers of SMEs and a review of SME financial statements are also undertaken. Univariate and multivariate data analysis is carried out with these two data sets.

    Overall, the interview and survey research concludes that SMEs in Thailand prepare and publish their financial reporting largely in order to meet legal requirements. They rely on their accountants in fulfilling these reporting obligations. For SME directors, costs of reporting are not considered to be an undue burden. Tax authorities, entities’ managements and lenders, in order, are perceived to be the most important users. However, it appears that the financial information in SME financial is unable to meet the needs of these main users. Preparation of financial statements with tax motivation, limited disclosures and out-of-date information are identified as the main weaknesses in SME financial statements. The analysis of SME financial statements shows that: the majority of SMEs engage in simple business transactions and non-compliance with mandatory accounting standards exists among many SMEs. SME stakeholders generally support using simpler accounting standards for SMEs. The IFRS for SMEs seems to be too complicated for many Thai SMEs and inconsistency with tax rules is an issue. The findings of this study are of interest to standard setters and other SME stakeholders in Thailand and other countries. The study also provides implications for SMEs, their accountants and their stakeholders.

    Date of AwardJul 2012
    Original languageEnglish
    Awarding Institution
    • University of Portsmouth
    SupervisorTony Hines (Supervisor) & Mike Page (Supervisor)

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