1.1 International definition of an SME and the difference between the differential reporting regime currently existing in AustraliaAccording to the IASB ED of a draft IFRS for SMEs, the The IASB's definition of an SME is intended to be (a) an entity without public accountability and (b) an entity that publishes general purpose financial statements for external users. If entities meet the definition of public accountability, as outlined in paragraph 1.2 ED, they are not permitted to use the proposed IFRS for SMEs. The IASB's definition of a public accounts table is not based on the determination of a size threshold; rather, it is whether an entity has issued equity or debt securities in a public market and therefore must file financial reports with external regulators or an entity holds assets in a fiduciary capacity for a large group of strangers. Furthermore, criterion (b) of the international definition essentially falls within the competence of each national jurisdiction to decide whether non-publicly accountable entities should be required to create general purpose financial statements. In contrast, the current Australian differential reporting regime is based on the “reporting entity concept” which can be understood as the central element of the Australian financial reporting framework. This means that an important factor in determining the applicability of accounting standards is the concept of accounting entity. Reporting entities must, regardless of their size and legal status, comply with all accounting standards. In principle, small and large reporting entities are fundamentally subject to the same financial reporting regime. As the IASB ED will clearly not apply to listed entities, it is necessary to review the Australian accounting requirements for unlisted (owner) entities and how these requirements differ from the international definition. Whether unlisted entities are subject to the accounting requirements of the Corporations Act 2001 depends on whether they are classified as small or large, so a size threshold test will be deployed. Pursuant to sections 292(2), 293 and 294 of the Companies Act, small proprietary companies are not required to prepare and file financial reports unless required by ASIC, or if ordered by a vote of 5% of their shareholders. or they are controlled by a foreign company. The IASB ED does not differentiate between for-profit and not-for-profit entities. Therefore, given the current reporting requirements for SMEs in Australia and the international definition, there is a