Journal of Accounting and Management Information Systems (JAMIS)

Considerations about the first time adoption of International Financial Reporting Standards - IFRS 1

Supp/2006 ,   p292..300

Nicolae TRAIAN

Keywords:   first time adoption, IFRS 1, European capital market, European Commission

In 2001 the European Commission took a positive step towards creating a high quality European capital market by requiring the use of International Financial Reporting Standards (IFRS) for all entities listed on European stock exchanges. The European Commission set 2005 as the date for this move. In order to facilitate the transition to international accounting standards and international financial reporting standards (IAS/IFRSs), the International Accounting Standards Board (IASB) decided on 19 June 2003 to replace SIC-8 with IFRS 1 First-time adop­tion of International Financial Reporting Standards. In accordance with IFRS 1, an enterprise applying IASs for the first time must comply with every single IAS and Interpretation in force at the time of that first applica­tion. Thus, like SIC-8, IFRS 1 requires retrospective application in most areas of accounting. However, IFRS 1 grants limited exemptions from that requirement in specified areas for practical reasons or where the costs entailed by compliance would most likely outweigh the benefit to users of financial statements.The IFRS 1 expands the disclosure requirements previously included upon first-time adoption of IFRS with explanation of the transition to IFRS.