IFRS 1: First-time adoption of International Financial Reporting Standards

IFRS Guide > IFRS 1

The International Accounting Standards Board (IASB) released International Financial Reporting Standard 1 (IFRS 1) to address the topic of first time adoption of international reporting standards. IFRS are principles based standards, rather than strict rules based standards that govern international accounting. As the world becomes more of a global marketplace, international standards which are used in much of the world can be advantageous for a company to use as their financial information is more comparable to industry peers. As companies grow, they often change the basis in which they account for financial information on their books. Usually smaller companies with fewer more personally involved shareholders will not be as concerned about conforming to standards, while larger companies with a larger number of shareholders will demand standards such as IFRS to be implemented. Once the company has grown to a sufficient size, the company will adopt IFRS and this is the topic in which the company must reference when making the move.

IFRS standards differ from IAS standards in that they began being introduced in 2001, whereas IAS were produced prior to this date by the IASC, or the International Accounting Standards Committee. Therefore when an IFRS standard and an IAS standard conflict, the IFRS is generally more authoritative due to being more recent.

Check out more high level explanations of the IASB IFRS in our Guide to IFRS International Financial Reporting Standards!

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