Background

During the lead up to 2005, entities in many jurisdictions would adopt International Financial Reporting Standards for the first time. The problems faced by an entity that adopts an entire accounting regime for the first time are somewhat different from those faced by an entity that adopts an individual change in an existing body of accounting standards. Some IASB constituents, including public accounting firms and entities in Europe, have expressed concerns about the complexity of this task and the existing guidance on first-time adoption (FTA). The Board plans to review the existing guidance with an eye to developing an approach that is both workable and conceptually sound.

In SIC-8 First-time Application of IASs as the Primary Basis of Accounting, the Standing Interpretations Committee concluded:

In theory, SIC-8 achieves complete comparability between enterprises, both between first time adopters of IAS and those entities already applying IAS, and across all entities using IAS.

However, the degree of comparability is subject, in part, to the availability of alternatives in some Standards and to determinations made about exemptions written into individual Standards (for example, IAS 8.49 notes that "comparative information should be restated unless it is impracticable to do so") and the overall exemption in SIC 8.3(b) that retrospective application is not required when "the amount of the adjustment relating to prior periods cannot be reasonably determined." In the context of some of the practical application problems raised, different enterprises converting to IAS might make very different interpretations of what is practicable or reasonably determinable, especially where the costs of compliance are very high.

IASB addressed these concerns in its project on first-time adoption of IFRS.

Current status of the project

This project has been completed. IFRS 1 First-time Adoption of International Financial Reporting Standards was issued on 19 June 2003.

Project milestones