International Financial Reporting Standards (IFRS) as a plethora of new accounting rules that are commonly used by public companies to provide efficient and accurate financial information in an organisation. However, the study revealed that Malaysian Small and Medium-Sized Enterprises (SMEs) face persistent challenges and apparent shortcomings in the adoption of IFRS. To solve the problems of the study, the goals were created to find out how external environmental factors impact SMEs in Perlis, Malaysia, when adopting IFRS. The research is conducted based on real-time data and the currently published papers, which are related to factors affecting the implementation of IFRS for SMEs in different countries. The research was evaluated using a quantitative method that could be easily collected and analysed from the population size data in Perlis, Malaysia. The research revealed that institutional pressure, economic development, and project governance all had a favourable relationship with the IFRS initiative, but cultural considerations had no discernible influence on SMEs' adoption of IFRS. This research provides an opportunity for the important contributors in SMEs to quickly address both internal and external factors and the future success of adopting IFRS. It is important to emphasise that the results of the study can help SMEs overcome obstacles and take advantage of the benefits associated with the adoption of IFRS by providing valuable insights and actionable recommendations. As a result, SMEs can improve their financial reporting processes, transparency, and compliance, which in turn can improve their competitiveness and credibility in the international marketplace.
