IFRS 1 is a standard issued by the International Accounting Standards Board (IASB) that sets out the requirements for a company’s first-time adoption of International Financial Reporting Standards (IFRS). The standard applies to all entities that are required or choose to adopt IFRS for the first time.
The objective of IFRS 1 is to ensure that an entity’s first set of financial statements, prepared under IFRS, provides high-quality information that:
Is transparent and comparable to previous periods
Provides a suitable starting point for accounting under IFRS in subsequent periods
Reflects the economic reality of the entity’s transactions and events.
IFRS 1 contains a number of specific transitional provisions that entities must follow when adopting IFRS for the first time. These provisions include:
The selection of accounting policies that comply with IFRS
The reconciliation of financial statements previously prepared under another accounting framework to IFRS
The recognition and measurement of assets, liabilities, equity, income, and expenses under IFRS
The disclosure of the impact of the transition to IFRS on the entity’s financial statements.
IFRS 1 also requires entities to provide additional disclosures in their first set of financial statements under IFRS. These disclosures include information about the entity’s accounting policies and the impact of adopting IFRS on its financial statements.
Overall, IFRS 1 plays a crucial role in ensuring that entities adopt IFRS in a consistent and transparent manner, thereby promoting the comparability of financial statements across different jurisdictions and improving the quality of financial reporting.