International Financial Reporting Standards (IFRS) is fast becoming the global accounting language. Over 100 countries have now adopted IFRS and many more have committed to make the transition in the next few years. The benefits of global standards are widely acknowledged. For companies, however, the conversion to IFRS is a major change both for the finance function and for the wider business.
The International Accounting Standards Board (IASB) has recognised the need for guidance. In 2003 it published IFRS 1 First-time adoption of International Financial Reporting Standards (IFRS 1). IFRS 1 covers the application of IFRS in a company's first IFRS financial statements. It starts with the basic premise that an entity applies IFRS for the first time on a fully retrospective basis. However, acknowledging the cost and complexity of that approach, it then establishes various exemptions in areas where retrospective application would be too burdensome or impractical. In planning the conversion, management must develop a detailed and specific understanding of IFRS 1's implications on their business. Questions to consider include:
- When is retrospective restatement required and what will this involve?
- What are the exemptions in IFRS 1 and how should we decide which to take up?
- What information is needed in our first IFRS financial statements?
- How does IFRS 1 affect the timing of our conversion and reporting?
The member firms of Grant Thornton International Ltd (Grant Thornton International) - one of the world's leading organisations of independently owned and managed accounting and consulting firms - have gained extensive insights into the more problematic aspects of first-time adoption of IFRS. Grant Thornton International, through its IFRS team, develops general guidance that supports its member firms’ commitment to high quality, consistent application of IFRS. We are pleased to share these insights by publishing this guide The Road to IFRS - A practical guide to IFRS 1 and first-time adoption. The guide reflects the collective experience of Grant Thornton International's IFRS team and member firm IFRS experts. It explains IFRS 1's key implementation issues and includes interpretational guidance in the more problematic areas. The guide also includes several examples illustrating the standard's disclosure and presentation requirements.
View the document in the following link.