Israel – IFRSs are now required for listed companies, optional for others

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01 Feb 2008

Starting 1 January 2008, Israel has required IFRSs for listed companies and has made IFRSs optional for others.

Listed companies had been permitted to use IFRSs since July 2006. Here are some details of the new requirements:
  • Listed companies. All companies listed on the Tel Aviv Stock Exchange (approximately 820 companies) are required to follow IFRSs, with one mandatory exception and one optional exception:
    • Banks. Banks must continue to follow an accounting framework that is close to US GAAP.
    • Dual registrants. Companies that are dually listed in the United States as well as in Israel may choose to use US GAAP instead of IFRSs. There are approximately 50 such companies. Some of them may now consider switching to IFRSs, now that the SEC no longer requires a reconciliation for Foreign Private Issuers reporting under IFRSs.
  • Subsidiaries and associates of listed companies. In practice, subsidiaries and associates of listed companies will also apply IFRSs in order to meet their shareholders' needs. Consequently, overall a few thousand Israeli companies are expected to use IFRSs as from 1 January 2008.
  • Unlisted companies. All unlisted companies except banks are permitted to follow IFRSs as an alternative to Israeli GAAP.
  • Interim reports. Companies using IFRSs will begin doing so in their interim reports for 2008. Listed companies are required by law to report on a quarterly basis.
  • Auditor's report. The auditor's report will refer to conformity with IFRSs. The exact wording of the auditor's report has not yet been adopted by the Institute of Certified Public Accountants in Israel.
  • Basis of presentation note. Will refer to conformity with IFRSs as required by paragraph 14 of IAS 1.
  • Future changes to IFRSs. These will automatically become mandatory in Israel. An 'endorsement process' will not be followed.

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