International Financial Reporting Standard 1 (IFRS1)
First time adoption of International Financial Reporting Standards
The basic rule is that there must be a complete switch: the first IAS accounts should be prepared fully in accordance with IAS recognition criteria and with all IASs in force for that year end, although there are some specific exemptions. Although IFRS1 is a fixed point of reference, a number of other IASs are under review, and, subject to the timely publication of changes, it will be the revised versions that have to be implemented.
For a company with a 31 December year end, this is the timetable:
| As At | 31 Dec 2003 | Prepare an IAS opening balance sheet; reconcile to UK GAAP balance sheet, publish UK GAAP accounts |
| Year End | 31 Dec 2004 | Prepare IAS accounts for the year, for use as comparatives next year. Publish UK GAAP accounts |
| 6 Months | 30 June 2005 | Prepare and publish interim accounts on IAS basis (these will need comparatives) |
| Year End | 31 Dec 2005 | Publish IAS accounts for the year, with IAS comparatives and the reconciliation of the 31 December 2003 UK and IAS balance sheets, and reconciliations of all 2004 primary statements. |
One particular exercise relating to the IAS opening balance sheet is to identify any transactions or arrangements, such as derivative contracts or derivates 'embedded' in other contracts (for example, an option to renew an existing loan agreement at an already fixed interest rate) that are not recognised in UK GAAP accounts, but which have to be included under IASs.
Find out more about the differences between the two sets of standards.
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