Over 90 countries have decided to adopt International Financial Reporting Standards (IFRSs) over the next five years, paving the way to move from individual jurisdictional standards to one set of international accounting standards. To help ease the transition, the International Accounting Standards Board has issued IFRS 1: First-time Adoption of International Financial Reporting Standards, which explains how an entity should make the transition to IFRSs from another basis of accounting.
Last July, the IASB first issued an exposure draft to help first-time adopters of international accounting standards make a smooth transition. It received over 80 comment letters and have revised the initial guidance based on that feedback.
The IASB has indicated that the transition to international accounting standards will bring significant value to all parties involved, and used as a guideline the requirement that the cost of transition should not exceed the benefits for first time adopters.
IFRS 1 requires an entity to comply with every IASB standard in force in the first year when the entity first adopts IFRSs, with some targeted and specific exceptions after consideration of the cost of full compliance. Under IFRS 1, entities must explain how the transition to IASB standards affects their reported financial position, financial performance and cash flows.
Copies of IFRS 1 First-time Adoption of International Financial Reporting Standards (ISBN 1-904230-19-9 (three-part set) are available, at £15 each (€24/US$23) including postage, from: IASCF Publications Department, 1st Floor, 30 Cannon Street, London EC4M 6XH, United Kingdom. Tel: +44 (0)20 7332 2730 Fax: +44 (0)20 7332 2749 Email: [email protected] Web: www.iasb.org.uk