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Chapter
33 /
First-Time Adoption of Internal Financial Reporting Standards (IFRS I)
363
Union adopted IFRS for the first time in their consolidated financia l statements, this standard was
extensively applied by these first-time adop ters of IFRS. Many globa l players outside Europe have
also adopted IFRS as their national standards since then. In fact, Australia, Hong Kong, New
Zealand, Philippines, and Singapore have adopted national standards that mirror IFRS. In all cases,
when entities are preparing to adopt IFRS for the first time, they need to understand and apply the
requirements of IFRS I.
1.6 This subject was earlier dealt with by an interpretation of lAS I, namely, SIC 8 that was is–
sued by the erstwhile Standing Interpret ations Committee (SIC) of the International Accounting
Standards Committee (IASC), the predecessor standard-setting body of the Intern ational Account–
ing Standards Board (IASB), and addressed matters arising from an entity's first-time application
of lAS. For this reason it was called SIC 8,
First-Time Applicatio n of lAS as the Primary Basis of
Accounting .
Being an interpretation of a Standard (as opposed to a Standard itself), the guidance in
SIC 8 was rather limited and not as detailed as IFRS I, covering various aspects of firs t-time adop –
tion of IFRS as contained in IFRS I. Due to the practical importance of this matter, the IASB is–
sued it as a separate Standard.
2. SCOPE
2.1 IFRS I applies to an entity that present s its first IFRS financial statements and sets out ground
rules that an entity needs to follow when it adopts IFRS for the first time as the basis for prep aring
its general-purpose financial statements. In other words, it applies to all those entities that present
for the first time their financial statements under IFRS. The Standard refers to such entities as
"First-Time Adopters of IFRS."
2.2 Furthermore, according to IFRS I, an entity shall apply this Standard not only in its
fi rst IFRS
financia l statements
but also in
each interim financial report
it presents under lAS 34 for the part
of the period cove red by its first IFRS financia l statements. An entity's first IFRS financial state–
ments are those that are the
first annual financial statements
in which the entity adop ts IFRS by an
explicit and unreserved statement
(in those financial statements)
of compliance with IFRS.
2.3 Financial statements presented by an entity in the curre nt yea r would qualify as "fi rst IFRS
financia l statements," as explained in the Standard, if an entity presented its most recent previous
financia l statements
(I)
Under national genera lly accepted acco unting principles (GAA P) or Standards that were
inconsistent with IFRS in all respects
(2) In conformity with IFRS in all respects, however, these financial statements did not cont ain
an explicit and unreserved statement that they complied with IFRS
(3) Categorically stating that the financia l statements comply with certain IFRS but not all
(4) Under national GAAP or Standards that differ from IFRS but using some indivi dual IFRS
to account for items that are not addressed by its national GAAP or Standards
(5) Under national GAAP or Standards with a reconciliation of some items to amounts deter–
mined under IFRS
Othe r examples of situations when an entity's current year's financia l sta tements would qualify as
"first IFRS financial statements" are when
(6) The entity prepared financial statements in the previous period under IFRSs but the finan–
cial statements were meant for "internal use only" and were not made availabl e to the en–
tity ' s owners or any other external users;
(7)
The entity prepared a reporting package in the previous per iod under IFRSs for consolida–
tion purposes without preparing a complete set of financial statements as mandated by lAS
I ;
and
(8) The entity did not present financial statements for the previous periods.
3. DEFINITIONS OF KEY TERMS (in accordance with IFRS 1)
Date of transition to IFRS. A critical date for first-time adopters of IFRS. Refers to the be–
ginning of the earliest period for which an entity presents full compara tive information under