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Effective Dates

Date recorded:

The Board considered a proposal to align effective dates of the new and amended Standards because of the large number of major projects expected to be finalised in 2010 and 2011. The Board agreed to establish certain high level principles that should be generally applied in determining effective dates unless the particular circumstances warranted a solution specific to the individual Standard.

Without much discussion, the Board agreed that new requirements should be effective for annual periods beginning on or after a specified date rather than for periods ending on a specified date.

The Board agreed that the date specified should be limited to 1 January and 1 July except for specific facts and circumstances.

The Board also agreed that the assessment of the effective date for major projects completed in 2010 would be on the basis that it would not be earlier than 1 January 2012 and for the major projects completed in 2011 not earlier than 1 January 2013. Those guidelines would apply only for major projects completed by the Board. Interpretations, annual improvements, and narrow-scoped projects could have shorter lead periods subject to principles established earlier.

The Board discussed in detail principles related to the early adoption of a new Standard. On one hand, the Board acknowledged that early adoption was necessary for first-time adopters in order to avoid two changes in requirements in a very short time. On the other hand, given the large number of changes and extended lead time (three years for some projects), early adoption vastly reduced comparability of the financial statements among entities.

Some Board members were concerned that permitting early adoption for some projects could lead to use of hindsight (especially for comparative periods) and further reduction of transparency and comparability in the financial statements. Those members noted that stating the earliest application date for some of the projects might be useful (a similar approach was used in IFRS 3 Revised).

Some Board members were concerned how the Board applied and articulated transition requirements for new Standards (retrospective, prospective, or other transition requirements) and inconsistencies in them. The staff explained that it will present a paper on the transition requirements and their consistency at a future meeting.

The staff also pointed out that the possibility of early application combined with the number of Standards that would change would lead to multiple combinations of consequential amendments to other Standards, and those requirements might be confusing. Some Board members suggested grouping new Standards issued together and aligning their effective dates and transition requirements.

Finally, the Board directed the staff to undertake an outreach regarding the early adoption requirements that would seek views of constituents how best to alleviate their concerns arising from the number of Standards to be issued or changed.

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