Implementation of Accounting Standard on Small and Medium-Sized Entities (SMEs)

Objective – Small- and medium-sized entities (SMEs) have an important role in economic growth. SMEs are a key source of employment and economic growth in Indonesia. Unfortunately, the growth of SMEs is not accompanied by the implementation of accounting and reporting, in accordance with applicable of Indonesian Accounting Standards for Non-Publicly-Accountable Entities (SAK-ETAP). SAK-ETAP is a self-contained of accounting standard for many transactions and events that a small or medium-sized entity or a private entity that is not publicly accountable may face. This research aims to analyse the implementation of Indonesian Accounting Standard for Non-Publicly-Accountable Entities on SMEs. Methodology/Technique – This research was conducted with the approach of surveys and field observations. The collection of data through surveys using questionnaires, direct observation and interviews according to respondents' experiences. Unit of analysis in this study is organizational or business unit. Its mean, that this study uses the organization as the subject to conclude the process of identification, implementation and evaluation Indonesian Accounting Standards for Non-PubliclyAccountable Entities or SMEs. Findings – The results of this study showed that only a small percentage of SMEs that have used SAK-ETAP as a guide in the preparation of the accounting and financial statements. This contrasts with the important role of SMEs in GDP of almost 58%. For that is very necessary the role of related institutions in supporting the development of SMEs in Indonesia, particularly in the financial statements standard. The majority of SMEs just recording to identify the transaction and recording the amount of revenue. Primary problem faced was the lack of their knowledge of SAK-ETAP and the competence of accounting staff were less. Novelty – This financial report is a major concern, as the financial statements providing financial information, financial performance, and cash flows of business units. If there are weaknesses in recording in the financial statements of SMEs it becomes a challenge for an institution that is competent to fix it. Socialization and guidance of SAK-ETAP are needed and more intensive to SMEs in Indonesia. Type of Paper: Empirical