400 Chapter 12 | The International Research Environment Apply specific requirements from the IFRS for SMEs Judgment hierarchy for policies under IFRS for SMEs If not available, management must use judgment to select an accounting policy that results in relevant and reliable information. Management shail consider the following sources, in descending order Guidance in the MFRS for SMEs involving similar and related issues. Conceptual guidance from Section 2 (Concepts and Pervasive Principles) of the IFRS for SMEs Guidance from ful IFRS involving similar and related Similar to full IFRS, the authority paragraph in the IFRS for SMEs makes clear which parts of the standard and its appendices are mandatory. This guidance is as follows: The International Financial Reporting Stamdard for Small and Medium-sized Entiries (UFR for SMEs) is set out in Sections 1-35 and the Glossary. Terms defined in the Glossary are bold type the first time they appear in each section. The IFRS for SMEs is accompanied a preface, implementation guidance, a derivation table, illustrative financial statements an a presentation and disclosure checklist, and a basis for conclusions. (Source: IFRS for SMEs 2009, Contents page) Also similar to full IFRS, entities whose financial statements comply with all requirements of the IFRS for SMEs must "make an explicit and unreserved statement of such compliance" in their financial statement footnotes,20 like this illustrative example from the IFRS for S.MEs publication: Note 2 Basis of preparation and accounting policies These consolidated financial statements have been prepared in accordance with the International Financial Reporting Standard for Small and Medium-sized Entities issued by the International Accounting Standards Board ...2 Considering the preceding discussion, respond to the following Now YOU Try 12.17 1. Why did the lASB create the IFRS for SMEs guidance? IFRS for SMEs (2009). Par. 10.3-10.6 IFRS for SMEs (2009), Par. 3.3. 27 IFRSfor SMEs (2009). Illustrative Financial Statements, in ustratne note 2, "Basis of Preparation and Accounting Policies