Transition and effective date

The Boards considered the transition requirements for the project. Most Board members expressed their preference for full retrospective application of the proposals.

Some Board members were concerned by the staff's assumption that a lead time of at least 4 years after the publication of the IFRS would be necessary, particularly to enable entities to change their systems for the direct cash flow method and by-nature disaggregation. Those Board members suggested that if the direct cash flow method required additional lead time it should be applied prospectively, whereas the rest of the document should be applied retrospectively.

Other Board members warned against such an approach. They noted that in that case entities would need to change their systems twice, which would lead to additional costs.

Finally, the Boards agreed to consider the transition requirements of all Memorandum of Understanding documents together with the expected effective dates. The Board also agreed preliminarily to propose full retrospective application and to ask constituents about the required lead time and potential problem areas in implementation of the proposals.

The IASB agreed to permit early adoption for first time adopters, mainly due to the concerns that, otherwise, two systems changes within a short period might be required.

The Boards agreed to address the early adoption by the existing IFRS preparers as well as interrelationship of timing with other projects comprehensively within a special document on effective date and transition requirements of major projects that would be completed within the MoU.