TABLE OF CONTENTS Making the switch from long-established local accounting rules to a new regime in one jump is a considerable task for any entity irrespective of the resources available to it. The IASB recognized the challenge and to assist transition issued an accounting standard bespoke to this issue: IFRS 1 First-time Adoption of IFRS. The opening paragraph of this standard makes it clear that the first financial statements (including interim financial statements for that period) produced under the new rules must contain high quality information that:
is transparent for users and comparable over all periods presented;
provides a suitable starting point for accounting under IFRS; and
can be generated at a cost that does not exceed the benefits to users.
[IFRS 1 para 1]
For UK companies the basic rules of transition are covered in Chapter 2, and can be distilled to the following:
Companies with debt or equity listed on a regulated exchange within the EU must produce IFRS-compliant group financial statements for their accounting periods starting on or after 1 January 2005.
Adjustments arising from the transfer are to be taken to reserves and not through the face of the profit and loss account.
Partial transfer is not allowed; there must be full adoption of IFRS rules.
In the light of the implementation date the relevance of IFRS 1 may seem spurious, but it is important to be aware of the impact international accounting had on the financial position and performance of a business, particularly when considering...
