Cost of converting to IFRS

Cost of converting to IFRS: The best changeover strategies allow an entity to apply IFRS time without significant error create a counting IFRS-capable financial reporting function, and complete the exercise for a reasonable cost without burning out the company financial reporting personals in the process.

Cost of converting to IFRS

Cost of converting to IFRS

This module focuses on the accounting procedures that a first-time adopter of the IFRS for SMEs follows as specified in Section 35

Transition to the IFRS for SMEs of the IFRS for SMEs. It introduces the learner to the subject, guides the learner through the official text, develops the learner’s understanding of the requirements through the use of examples and indicates significant judgements that are required in accounting for the transition to the IFRS for SMEs.

Cost of converting to IFRS :

Furthermore, the module includes questions designed to test the learner’s knowledge of the requirements and case studies to develop the learner’s ability to account for the first-time adoption of the IFRS for SMEs and to make the disclosures required in an entity’s first financial statements that conform to that IFRS. |Learning objectives Upon successful completion of this module you should know the financial reporting requirements for a first-time adopter of the IFRS for SMEs.

Cost of converting to IFRS

Furthermore, through the completion of case studies that simulate aspects of the real-world application of that knowledge, you should have enhanced your competence to account for the transition to the IFRS for SMEs.

In particular you should, in the context of the IFRS for SMEs, be able:

 to distinguish when an entity is a first-time adopter of the IFRS for SMEs.

 to identify the date of transition to the IFRS for SMEs.

 to understand what is required, what is permitted, and what is prohibited when selecting an entity’s initial accounting policies in accordance with the IFRS for SMEs.

 to prepare an opening statement of financial position.

 to demonstrate an understanding of the mandatory exceptions and optional exemptions to retrospective application of the IFRS for SME on first time adoption provided within Section 35.

 to provide the disclosures required for a first-time adopter of the IFRS for SMEs.

 to demonstrate an understanding of significant judgements that are required in accounting for the transition to the IFRS for SMEs.

Cost of converting to IFRS

IFRS for SMEs The IFRS for SMEs is intended to apply to the general purpose financial statements of entities that do not have public accountability (see Section 1 Small and Medium-sized Entities). The IFRS for SMEs includes mandatory requirements and other material (non-mandatory) that is published with it. The material that is not mandatory includes:

 a preface, which provides a general introduction to the IFRS for SMEs and explains its purpose, structure and authority.

 implementation guidance, which includes illustrative financial statements and a disclosure checklist.

 the Basis for Conclusions, which summarises the IASB’s main considerations in reaching its conclusions in the IFRS for SMEs.

 the dissenting opinion of an IASB member who did not agree with the publication of the IFRS for SMEs. In the IFRS for SMEs the Glossary is part of the mandatory requirements.

Cost of converting to IFRS:

In the IFRS for SMEs there are appendices in Section 21 Provisions and Contingencies, Section 22 Liabilities and Equity and Section 23 Revenue. Those appendices are non-mandatory guidance. Introduction to the requirements The objective of general purpose financial statements of a small or medium-sized entity is to provide information about the entity’s financial position, performance and cash flows that is useful for economic decision-making by a broad range of users who are not in a position to demand reports tailored to meet their particular information needs.

The objective of Section 35 is to provide a suitable starting point for accounting in accordance with the IFRS for SMEs, and also to ensure that the financial statements contain high quality information that is transparent for users, comparable over all periods presented and that can be generated at a cost that does not exceed the benefits to users. Consequently, Section 35 prescribes the accounting treatment and disclosure requirements for a first-time adopter of the IFRS for SMEs. An entity can be a first-time adopter of the IFRS for SMEs only once. An entity’s first financial statements that comply with the IFRS for SMEs are prepared using the requirements in the version of the IFRS for SMEs that is effective at the entity’s initial reporting date, as modified by any specified exemptions (see paragraphs 35.9–35.11).

Cost of converting to IFRS:

An entity’s first financial statements prepared in accordance with the IFRS for SMEs must include an explicit and unreserved statement of compliance with the IFRS for SMEs, comparative information for at least one prior period and an explanation of how the transition from the previously applied accounting framework to the IFRS for SMEs affected its reported financial position, financial performance and cash flows. Section 35 specifies requirements for preparing an entity’s opening statement of financial position as of its date of transition to the IFRS for SMEs that it prepares as a starting point for its accounting under this IFRS.

The date of transition to the IFRS for SMEs is the beginning of the earliest period for which full comparative information in accordance with this IFRS is Module 35 – Transition to the IFRS for SMEs IFRS Foundation: Training Material for the IFRS® for SMEs (version 2011-04) 3 presented. For example, if an entity’s first annual financial statements that comply with the IFRS for SMEs are for the year ended 31 December 20X4 and it presents comparative information for only one year, its date of transition is 1 January 20X3 (equivalent to close of business on 31 December 20X2).

Cost of converting to IFRS

The same accounting policies are used throughout all periods presented (ie including comparative information) in the first set of financial statements that conforms to the IFRS for SMEs . Those accounting policies must be applied retrospectively, except as specified in paragraph 35.9 and when the entity chooses to use one or more of the exemptions from paragraph 35.10. There is also a general exemption from retrospective application when this would be impracticable (see paragraph 35.11).

The accounting policies may differ from those used under the entity’s previous financial reporting framework. Changes in accounting policies on first time adoption of the IFRS for SMEs may result in adjustments to the previously reported figures for the comparative period(s). All adjustments relating to reporting periods before the date of transition (ie at 1 January 20X3) are recognised directly in the retained earnings (or, if appropriate, in another category of equity) at the date of transition to the IFRS for SMEs (see paragraph 35.8).

Cost of converting to IFRS

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