3.1 AN INTRODUCTION TO IFRS 1
The IASB issued IFRS 1 First-time Adoption of International Financial Reporting Standards in 2003. The standard contains requirements and guidance to assist in the preparation of an entity's first IFRS financial statements. IFRS 1 has been amended many times to reflect new or revised IFRS requirements, which made the standard complex and somewhat difficult to follow. This led to the standard being restructured and revised in 2008 to make it more understandable, and it has been amended several times since to accommodate requirements of new or revised IFRSs.
The basic principle of IFRS 1 is that there should be a full retrospective adoption of IFRS at the date of transition to IFRS, resulting in a set of financial statements portraying the entity's performance and position as if it had always reported under IFRS.
In the transition to IFRS a reporting entity should do the following in order to implement IFRS 1 successfully:
- Clarify when to apply IFRS 1, i.e., which financial statements fall under the scope of IFRS 1;
- Identify the date of transition to IFRS and prepare an opening statement of financial position at that date;
- Select appropriate IFRS-compliant accounting policies to be applied retrospectively to all periods presented in the financial statements;
- Decide whether to apply any of the optional exemptions from full retrospective application of the new accounting policies;
- Prepare the extensive disclosures ...