IFRS for SMEs: September 2026 Update explained
A quarterly staff update from the IFRS Foundation is usually read as a progress bulletin, but the September 2026 edition is more than that. It is the first update under the third edition of the standard that pulls three strands together: a technical spotlight on agriculture, a live exposure draft that could narrow a consolidation requirement for intermediate parents, and a new wave of educational modules. For a preparer applying IFRS for SMEs — whether in a Pacific or Caribbean jurisdiction that has long permitted the standard, or in a country that has adopted it more recently — the practical question is simple. What has to change in next year’s financial statements, and what should be on the agenda for the audit committee this quarter? The September 2026 IFRS for SMEs Accounting Standard Update answers that question directly; this post distills the answer and places each item in the standard.
What is the IFRS for SMEs, and who applies it today?
The IFRS for SMEs is a self-contained standard for entities without public accountability. As of the September 2026 update, 88 jurisdictions require or permit the standard; Samoa is the newest to adopt.
The IFRS for SMEs Accounting Standard is published by the IASB and sits beside full IFRS Accounting Standards. It is designed around the needs of entities that are not publicly traded and do not hold assets in a fiduciary capacity. The third edition rebuilt the standard around a new Section 2 Concepts and Pervasive Principles, pulled fair value measurement into its own Section 12, and refreshed the sections that preparers reach for most — revenue, financial instruments, consolidation, cash flows, and specialised activities.
Eligibility is a jurisdictional question, not a size question. The IFRS Foundation tracks adoption through its country profiles, and the latest one is the Samoa jurisdictional profile, which brings the global count to 88 jurisdictions that require or permit the standard. In our practice, the standard turns up most often for US-headquartered groups with subsidiaries in Caribbean and Pacific jurisdictions, and in cross-border engagements where the overseas entity’s local statutory statements are prepared on IFRS for SMEs while the US parent files on US GAAP.
What does the September 2026 spotlight say about agriculture under Section 34?
The spotlight covers Section 34 Specialised Activities and highlights two third-edition changes to agriculture: the bearer-plant crossover with Section 17, and the move of fair value guidance into the new Section 12.
Section 34 applies when an entity manages the biological transformation of biological assets for sale, into agricultural produce, or into additional biological assets. Harvesting from unmanaged sources — ocean fishing or deforestation — is not agricultural activity, and animals used for competitions, racing, or exhibitions are not inside the section either. Those definitions matter because they determine whether Section 34 even applies before any measurement choice is made.
Where the section does apply, an SME recognises a biological asset or agricultural produce only when it controls the asset as a result of past events, future economic benefits are probable, and fair value or cost can be measured reliably without undue cost or effort. An SME does not have a free choice between the fair value model and the cost model; the fair value model is required for every class of biological asset where fair value is readily determinable without undue cost or effort. The cost model is a fallback, not a policy election.
The third edition made two changes to the agriculture requirements that the September update highlights. First, it added a requirement to account for bearer plants under Section 17 Property, Plant and Equipment where they can be measured separately from the produce growing on them without undue cost or effort — mirroring the 2014 amendment to IAS 41. Second, the fair value measurement guidance that previously lived inside Section 34 now sits in the new Section 12 Fair Value Measurement, so entities apply one consistent set of fair value principles across every section of the standard.
How do you draw the line between Section 17 and Section 34 for bearer plants?
Apply the “separate measurement without undue cost or effort” test at initial recognition. If it passes, the plant is Section 17 and the produce on it stays in Section 34. If it fails, the whole asset remains in Section 34.
A bearer plant is a living plant used in the production or supply of agricultural produce, expected to bear produce for more than one period, and with a remote likelihood of being sold as agricultural produce except for incidental scrap sales. Tea bushes, grape vines, oil palms, and rubber trees are the textbook examples. Economically, bearer plants behave more like property, plant and equipment used to manufacture goods than like inventory grown for immediate sale, which is why the standard pulls them into Section 17 when they can be measured separately. The treatment is set out in the following decision:
| Can the plant be measured separately from the produce on it, without undue cost or effort? | Where the plant goes | Where the produce on it goes |
|---|---|---|
| Yes | Section 17 Property, Plant and Equipment — cost less depreciation and impairment | Section 34 — fair value model where fair value is readily determinable; cost model otherwise |
| No | Section 34 — whole asset (plant plus produce) measured as one biological asset | Section 34 — same unit of account as the plant |
Two assessments drive the result. The first is made at initial recognition and asks whether separate measurement is practicable. The second, for assets that remain in Section 34, asks whether fair value is readily determinable for the class of biological asset without undue cost or effort. Both are judgment calls, and both should be documented — reviewers will test them against observable market activity and the information systems the entity actually runs.
From our practice: write the “undue cost or effort” memo before the first harvest
In our practice, the single most useful audit workpaper for an SME in agriculture is a short memo that sets out the two assessments, names the people who made them, lists the market data and valuation inputs considered, and ties the conclusion to the chart of accounts. Entities that write that memo once, at transition or at planting, almost never have an audit issue later. Entities that reconstruct it in year-end fieldwork almost always do.
What does the Exposure Draft Consolidation Exception change for intermediate parents?
It would relieve an SME intermediate parent from preparing consolidated financial statements where its parent is an investment entity measuring the SME at fair value through profit or loss under IFRS 10. The comment period closed on 9 September 2026.
The IASB published the Exposure Draft Consolidation Exception in May 2026 in response to a question raised through the SMEIG. Under the current standard, an entity that is itself a parent must present consolidated financial statements, with limited exceptions. The proposed exception would add to those exceptions where the SME is an intermediate parent whose own parent is an investment entity, provided that the investment entity parent prepares financial statements applying full IFRS Accounting Standards in which investments in subsidiaries are measured at fair value through profit or loss in accordance with IFRS 10 Consolidated Financial Statements.
The practical effect, if finalised, would narrow a common pain point for private equity and family office structures that hold operating businesses through SME-level intermediate holding companies. Rather than preparing a mid-stack consolidation that no external user reads, the SME could present stand-alone financial statements, relying on the fair value measurement in the investment entity parent’s accounts to carry the subsidiary information to the users who need it. The IASB staff and the SMEIG are discussing the feedback in October 2026, and both meetings are being streamed.
Watch two eligibility tests before planning around the exception
The exception only applies if the parent qualifies as an investment entity under IFRS 10 and actually measures its subsidiaries at fair value through profit or loss. A parent that satisfies the IFRS 10 definition in form but equity-accounts a controlled investment, or that applies a national GAAP for its own reporting, would not trigger the relief. Preparers hoping to rely on the exception should pressure-test both tests on their actual parent before building it into next year’s reporting plan.
What implementation resources and SMEIG openings are now available?
The IASB has released new educational modules for Sections 17, 29, and 34, which join earlier third-edition modules. Separately, the Trustees are seeking new SME Implementation Group members.
Between the June and September 2026 updates, the IASB published three new educational modules — Module 17 Property, Plant and Equipment, Module 29 Income Tax, and Module 34 Specialised Activities. Earlier modules cover the sections changed significantly in the third edition, including Module 1 Small and Medium-sized Entities, Module 2 Concepts and Pervasive Principles, Module 7 Statement of Cash Flows, Module 9 Consolidated and Separate Financial Statements, Module 11 Financial Instruments, Module 12 Fair Value Measurement, Module 15 Joint Arrangements, Module 18 Intangible Assets other than Goodwill, Module 19 Business Combinations and Goodwill, Module 23 Revenue from Contracts with Customers, Module 26 Share-based Payment, Module 28 Employee Benefits, and Module 35 Transition to the IFRS for SMEs Accounting Standard. The remaining modules are expected to be published in the third quarter of 2026. All sit on the IASB’s IFRS Foundation supporting materials page alongside a webcast series and a podcast series — the August 2026 podcast episode walks through the Consolidation Exception Exposure Draft, which is a good primer before reading the ED itself.
The SME Implementation Group — a consultative group that advises the IASB on how the standard is applied around the world — currently has twelve members. The IFRS Foundation Trustees are seeking new members to maintain breadth across geographies and backgrounds. SMEIG members serve an initial three-year term and are eligible for a second three-year term. Applications are handled through the IFRS Foundation job board; a CPA with practical SME auditing or preparation experience, especially from an under-represented jurisdiction, is exactly the profile the Trustees are looking for.
Summary: IFRS for SMEs — September 2026 Update at a glance
- The standard is now required or permitted in 88 jurisdictions, with Samoa the newest to adopt.
- Agriculture under Section 34: bearer plants measurable separately from their produce move to Section 17; fair value guidance now lives in Section 12.
- The May 2026 Exposure Draft Consolidation Exception would relieve an SME intermediate parent from consolidation where its own parent is an investment entity measuring the SME at fair value through profit or loss under IFRS 10.
- New educational modules for Section 17 (PP&E), Section 29 (Income Tax), and Section 34 (Specialised Activities) are now available on the IFRS Foundation’s supporting materials page.
- The IFRS Foundation Trustees are seeking new SMEIG members; applications are open on the IFRS Foundation job board.
Frequently asked questions on IFRS for SMEs ❓
Q. What is the IFRS for SMEs Accounting Standard and who can use it?
The IFRS for SMEs is a self-contained standard issued by the International Accounting Standards Board (IASB) for entities without public accountability that publish general-purpose financial statements. Jurisdictions decide which entities may or must apply it; as of the September 2026 update, 88 jurisdictions require or permit the standard, including the newest adopter, Samoa. It is not open to a US private company that files US GAAP financials — eligibility is set by whether a jurisdiction permits it.
Q. What is new for agriculture in the third edition of the IFRS for SMEs?
Section 34 Specialised Activities was updated in two important ways. First, a bearer plant that can be measured separately from the produce growing on it without undue cost or effort is now accounted for under Section 17 Property, Plant and Equipment rather than Section 34. Second, the general guidance on fair value measurement was moved out of Section 34 and into the new Section 12 Fair Value Measurement. The agriculture requirements remain anchored in IAS 41 and incorporate the 2014 bearer-plants amendment to IAS 41.
Q. How do I decide whether a bearer plant belongs in Section 17 or Section 34?
Ask one question first: can the plant be measured separately from the produce growing on it, both initially and on an ongoing basis, without undue cost or effort? If yes, the plant itself is Section 17 property, plant and equipment, measured at cost less depreciation and impairment; the produce still attached to the plant stays in Section 34. If no, the whole asset — plant plus produce — remains in Section 34 and is measured under the fair value model where fair value is readily determinable without undue cost or effort, or under the cost model otherwise.
Q. What does the May 2026 Exposure Draft Consolidation Exception propose?
The Exposure Draft would introduce an exception so that an SME intermediate parent is no longer required to prepare consolidated financial statements where its own parent is an investment entity that measures its subsidiaries at fair value through profit or loss under IFRS 10. The comment period closed on 9 September 2026; the IASB staff and the SME Implementation Group (SMEIG) are discussing feedback in October 2026, with public meetings available online so stakeholders can follow the project.
Q. What new implementation resources did the IASB release before the September update?
Since the June 2026 update, the IASB has published new educational modules for Section 17 Property, Plant and Equipment, Section 29 Income Tax, and Section 34 Specialised Activities. Earlier modules covered the sections changed significantly in the third edition — among them Section 2 Concepts and Pervasive Principles, Section 7 Statement of Cash Flows, Section 11 Financial Instruments, Section 12 Fair Value Measurement, Section 23 Revenue from Contracts with Customers, and Section 35 Transition to the IFRS for SMEs Accounting Standard. A webcast series and a podcast series run alongside the modules.
Q. Is there a call for SME Implementation Group members I should know about?
Yes. The IFRS Foundation Trustees are seeking new SMEIG members to maintain geographic and professional breadth on the group. The SMEIG is a consultative group that supports the IASB on the global adoption and application of the standard. Members serve an initial three-year term with eligibility to be reappointed for a second three-year term. Applications are submitted through the IFRS Foundation job board.
This article is general information, not accounting or audit advice for your situation. Application of the IFRS for SMEs Accounting Standard depends on the jurisdiction, the entity’s facts, and the policy choices available under the standard. For a review of how the September 2026 update affects your financial statements, contact SW Accounting & Consulting Corp.
