Companies aiming to enter European stock exchanges must prepare their statements in accordance with International Financial Reporting Standards (IFRS). The actual date of introduction of IFRS for all listed companies was set in 2005. In order to facilitate the task of transition from national to international standards, the International Accounting Standards Board adopted IFRS 1 in June 2003, which is so called "First-time Adoption of IFRS". Consequently, the transition to international reporting standards begins with the application of IFRS 1.

The goal of IFRS 1 is to ensure that an entity's first IFRS financial statements contain high quality information.

IFRS 1 applies to those financial statements, for the first time including references to IFRS compliance. This standard should be applied by enterprises whose financial statements met only some of the standards, or which explained the disagreement between IFRS and national P (S) accounting books.

The main terms used in the application of IFRS 1 are summarized in Table 2.3.

The first financial statements of an entity, prepared in accordance with IFRS, are the first annual financial statements in which the entity applies IFRS and at the same time clearly and unconditionally expresses compliance with IFRS in these statements.

According to the requirements of IFRS 1, the company prepares an IFRS Balance Sheet at the beginning of the first period for which comparative information is provided. Comparative information is presented for at least one year.

For example, companies that apply IFRS since 1.01.2005 for the preparation of financial statements in accordance with IFRS must prepare the Balance Sheet at the beginning of the period no later than 01.10.2004 That is, in the Balance Sheet as of January 1, 2005, the balances at the beginning of the period must be formed as of January 1, 2004.

Table 2.3. Definition of terms used in the APPLICATION of IFRS 1

	Timing		Definition
	Balance sheet according to IFRS at the beginning of the period	Opening IFRS balance sheet
	Date of transition to IFRS	Date of transition	Beginning of the first period for which an entity provides full comparative IFRS information in its first IFRS financial statements
	Reasonable cost		An amount that is used as a substitute for cost or amortized cost at a specific date. Further depreciation assumes that the entity initially recognized the asset or liability at a specific date and that its cost is equal to the reasonable cost
	Reporting date		End of last period, cover financial statements or interim financial report
	First reporting period under IFRS	First IFRS reporting period	The reporting period ending on the date of the first financial statements of the enterprise in accordance with IFRS
	First financial statements under IFRS		The first annual financial statements in which an entity applies International Financial Reporting Standards (IFRS) through a clear and unconditional statement of compliance with IFRS

To prepare the balance at the beginning of the period, you must:

o remove all assets and liabilities that do not meet IFRS criteria;

o re-evaluate all recognition of an item in accordance with IFRS requirements;

o include in the balance sheet all assets and liabilities that meet the criteria for recognition of IFRS, but were not recognized under P (S) BU.

It should be noted that IFRS 1 proposes to apply exemptions in some cases in order to simplify the preparation of the balance sheet at the beginning of the period when recognition or revaluation may not be required.

IFRS 1 allows an exemption from full retrospective application requirements in the following cases:

o IFRS 16 "Property, Plant and Equipment", 38 "Intangible Assets", 40 "Investment Property": Fair value at the balance sheet date at the beginning of the period can be used as deemed cost instead of recovered cost if it can be compared with fair value, cost price;

o IAS 21 The Effects of Changes in Foreign Exchange Rates: The requirement to identify cumulative exchange rate differences for foreign operations as a separate component of equity is optional.

As a rule, the estimates that were used in accordance with the P (C) BU, previously used by the enterprise, are not replaced, unless there is clear evidence of the erroneousness of these estimates.

The adjustments are shown against the accumulated retained earnings at the beginning of the period, with the exception of some adjustments to intangible assets.

IFRS 1 can be summarized in the following main points:

1. An enterprise must prepare its first financial statements in accordance with all IFRSs in force at the reporting date, using them retrospectively, with some possible exceptions. For example, an entity that switched to IFRS in 2005 must use all standards in effect as of December 31, 2005.

2. An enterprise should recognize in its financial statements all assets and liabilities as required by IFRS, and not recognize assets and liabilities if this is contrary to IFRS.

3. Assessment of assets and liabilities recognized in the balance sheet at the beginning of the reporting period must be carried out in accordance with IFRS, in particular IFRS 1.

4. All accounting estimates must be made as required by IFRS.

5. The accounting policies that an entity uses in its IFRS balance sheet at the beginning of the period may differ from those that it used at the same date using previous accounting standards. Final adjustments arise from events and transactions prior to the date of transition to IFRSs. Consequently, these adjustments should be recognized directly in retained earnings (or, where appropriate, in another category of equity) at the date of transition to IFRSs.

6. All disclosure requirements must be met in accordance with IFRS, including all erasures of classifications as required by IFRS.

7. Comparative information for the previous period should be presented in accordance with IFRS (with some possible exceptions, for example, when IAS 39 “Financial Instruments: Recognition and Measurement” was established). It is not required to submit comparative information for more than one year.

8. The agreement between the accounting standards that were used earlier and IFRS in the context of: a) equity capital as of the date of transition to IFRS and the last annual reporting submitted according to the old accounting standards should be presented; b) gains or losses for the same period with all the notes necessary to understand the differences that will arise on transition to IFRS.

9. In the general principle of IFRS 1 retrospective application of standards, there are several voluntary redundancies and mandatory exceptions. Exemptions from the application of the requirements of the standards are granted in accounting areas where the costs of preparing the information exceeded the benefit of users from such information, and where, as has been proven in practice, it is difficult to make retrospective application, for example, it concerns business combinations and pension obligations "related.

As already indicated, the general principle of IFRS 1 is the principle of retrospective application. The date of transition to IFRS is set “the beginning of the previous period for which the company can fully provide comparative information under IFRS”. An entity adopting IFRS for the first time must prepare an opening balance sheet at the date of transition to IFRS. The opening balance sheet is prepared based on IFRS 1 and its general principle of retrospective application, including voluntary redundancies and mandatory exemptions specified in the standard. It is not necessary to present the opening IFRS balance to external users of financial statements, but this balance is the starting point for preparing the first IFRS financial statements.

Preparing an opening IFRS balance sheet may require calculations or information gathering that was not previously undertaken by the entity when it used national accounting standards. Let us give an example of how the application of IFRS can affect the balance sheet items at the date of transition to the new standards (Table 2.4).

IFRS 1 establishes two categories of exceptions to the principle that the balance sheet of an entity at the beginning of the period is consistent with each IFRS:

a) paragraphs 13-25G allow exemption from some requirements of other IFRS;

Table 2.4. Impact on IFRS balance sheet items

IFRS requirements	Impact on balance sheet items
Recognition of assets and commitments to	New articles appear:
	Pension payments;
	Share based payment;
	Purchase intangible assets;
	Derivative financial instruments;
	Finance lease assets and liabilities;
	Deferred taxes.
Failure to recognize assets and liabilities, if required by IFRS	Will not be displayed: Collateral for which there are no legal or actual obligations; General reserves; Internally created intangible assets

IFRS 1 First-time Adoption of International Financial Reporting Standards

In 2003 the IASB issued IFRS (IFRS) 1 "First Adoption of International Financial Reporting Standards", replacing Interpretation of IFRS (SIC) 8 “Applying IFRS for the first time as the main accounting basis”. This standard is the first in the revised International Standards. It is effective for financial statements for periods beginning January 1, 2004.

The standard was adopted so that companies that are transitioning to IFRS in the near future could prepare in advance all the necessary data for the formation of opening balances and comparative information so that the reporting fully complies with IFRS requirements.

The need for a separate standard on first-time adoption of IFRS is due to a number of reasons, which include:

• 1) high costs for drawing up financial statements in accordance with IFRS for the first time, including training of employees, payments to audit companies, obtaining various expert assessments, recalculations;
• 2) an increase in the number of companies switching to IFRS, and the related requirement for more detailed clarification of some important issues;
• 3) the requirement of retrospective application of IFRS, causing additional difficulties. It is often difficult to change accounting estimates retrospectively due to the lack of information available at the date of the financial statements. For particularly difficult cases IFRS (IFRS) 1 implies exclusions from retrospective application of IFRS requirements in order to avoid costs in excess of benefits to users of financial statements. The standard allows six voluntary and three mandatory exemptions from retrospective application of IFRS requirements;
• 4) coverage of additional requirements but disclosure of information explaining how the transition to IFRS affected the financial position, financial results, in the form of reconciliation of the company's capital and net profit indicators;
• 5) the need to formulate a new accounting policy that meets the requirements of all standards as of the reporting date;
• 6) the need to form an opening balance sheet in accordance with IFRS at the date of transition;
• 7) presentation of comparative data at least for the year preceding the year of the first reporting under IFRS.

First-time IFRS financial statements should provide users with useful information:

• 1) understandable;
• 2) comparable to the information of all the periods presented;
• 3) which can serve as a starting point for the further preparation of financial statements in accordance with IFRS;
• 4) the costs of compiling which would not exceed the benefits from its value for users of financial statements.

IFRS (IFRS) 1 applies to the first IFRS financial statements and to each interim IFRS financial statements for any period that is part of the year covered by the first IFRS financial statements.

Financial statements in accordance with IFRS (compliance with IFRS) - these are financial statements that meet all the accounting and disclosure requirements of each applicable standard and IFRS interpretation. Compliance with IFRS should be disclosed in such financial statements.

First IFRS financial statements - these are the first annual financial statements to clearly and unconditionally state their compliance with IFRS.

The starting point for preparing financial statements in accordance with IFRS is the opening IFRS balance sheet prepared at the date of transition to IFRS. The publication of the opening balance sheet is not required.

Date of transition to IFRS (date of transition to IFRS ) is the beginning of the earliest period for which an entity provided full comparative information in accordance with IFRS in its first IFRS financial statements.

An opening IFRS balance sheet is prepared at the date of transition. As a rule, the opening balance sheet is compiled two years before the reporting date of the first IFRS statements.

Opening IFRS balance sheet - this is the company's balance sheet prepared in accordance with IFRS at the date of transition to IFRS.

Balance sheet date, reporting date - this is the end of the last period for which the financial statements were prepared.

Retrospective judgment (hindsight) - it is a judgment about a past event, taking into account the experience gained since that time.

Estimates - these are estimates associated with the uncertainty inherent in the activities of any company. The value of some objects cannot be measured, but can only be calculated based on professional judgment. The use of reasonable estimates is an important part of preparing financial statements that objectively reflect the financial condition, results of operations and cash flows under IFRS.

According to IFRS (IFRS) 1 in the first IFRS financial statements:

• 1) comparative data must be provided for at least one year;
• 2) the accounting policy must comply with the requirements of each applicable IFRS in effect at the reporting date of the first financial statements, and be applied to form the indicators of the opening balance sheet and reporting for all comparative periods included in the first financial statements under IFRS;
• 3) the date of transition to IFRS, it is also the date of the opening balance sheet, depends on the number of periods for which comparative information is presented.

As a general requirement, the date of transition to IFRS is two years from the date of the first financial statements prepared in accordance with IFRS. So, when switching to IFRS, starting with the financial statements for 2012, the opening balance sheet should be compiled as of January 1, 2011.For 2011, a complete set of financial statements but IFRS is presented, but so far without comparative information, and for 2012 d. a complete set of financial statements in accordance with IFRS is formed with comparative information.

The company should form the opening balance sheet as if it were based on the assumption that the financial statements in accordance with IFRS have always been prepared, i.e. retrospectively apply the requirements of all international standards. To this end, the company must:

• 1) recognize assets and liabilities in accordance with IFRS;
• 2) exclude items recognized as assets or liabilities if IFRS does not allow such recognition;
• 3) reclassify items that have been recognized in accordance with national accounting rules as one type of assets, liabilities or elements of equity, and according to IFRS represent a different type of assets, liabilities or elements of equity;
• 4) include in the opening balance all items in the assessment that complies with IFRS;
• 5) calculate how the result of changes in financial statements compiled in accordance with national standards, after bringing it to IFRS, will affect the amount of retained earnings or another item of equity.

If the opening balance sheet is formed as of January 1, 2012, and the company has existed for 10 years, when reflecting assets and liabilities in the balance sheet, the information should be examined starting from the moment of initial recognition of accounting objects. Given that such information is not always available at the date of transition and the costs of generating it may exceed the corresponding economic effect for users of financial statements, in IFRS (IFRS) 1 provided exclusions from retrospective application separate standards when first applying IFRS. As noted, there are two types of exceptions: voluntary (which the company management can choose at its discretion) and mandatory (which should be applied regardless of the company's decision).

Cases of application of exceptions and a summary of the adjustments are presented in table. 2.3 and 2.4.

Disclosures in the first IFRS financial statements.

The information must be disclosed in full, as required by the relevant IFRS standards, subject to additional IFRS requirements (IFRS) 1.

Table 23

The end of the table. 23

Voluntary an exception	exclusion
2. Using fair value as an estimate	The company is not required to recreate the original information about the value of property, plant and equipment, intangible assets and investment property, which is a significant simplification. The estimated cost for subsequent amortization and testing of such items for impairment is either the fair value at the date of transition to IFRSs or the revalued amount at the last revaluation. In this case, the conditions must be met that the carrying amount of the object is comparable to its fair value and that the revaluation was carried out by recalculating the actual costs for the price index. This exception applies to any single object
3. Employee benefits	The company may not retrospectively restate actuarial gains and losses since the inception of the pension plan. They can be calculated prospectively: from the date of transition to IFRS onwards. Recognition of actuarial gains and losses using IAS described (IAS) 19 “corridor method” may be deferred until the next reporting period. If a company uses this exemption, then it applies to all retirement plans.
4. Cumulative currency translation adjustment	The company may not retrospectively restate the exchange rate differences from the date of formation or acquisition of the subsidiary. They can be calculated prospectively. All cumulative currency translation gains and losses are assumed to be zero. If a company uses this exemption, then it applies to all subsidiaries.
5. Combined financial instruments	An analysis of combined financial instruments should be carried out in terms of separating their debt and equity components at the time of the appearance of such instruments. Companies are not required to identify equity elements of a compound financial instrument if the debt component at the date of transition to IFRSs has already been settled.
6. Assets and liabilities of subsidiaries, associates and joint ventures	The dates of transition to IFRS may be different for the parent, subsidiary, associate. The exception allows the subsidiary to measure assets and liabilities either at the carrying amounts included in the parent company's consolidated financial statements or based on IFRS (IFRS) 1 at the date of transition to IFRS. The carrying amount of the assets and liabilities of the subsidiary must be adjusted so as to exclude the adjustments made in the consolidation using the purchase method

application of IFRS

Table 2.4

Mandatory an exception
1. Derecognition of financial assets and liabilities	According to the requirement of IAS (IAS) 39 the requirement to derecognise financial assets and liabilities is effective from 1 January 2001. Therefore, financial assets and liabilities that were derecognised before 1 January 2001 are not recognized in the first IFRS financial statements
2. Hedge accounting	Hedge accounting should not be applied retrospectively and reflected in the opening IFRS balance sheet and for any transaction in the first IFRS financial statements. Hedge accounting can be introduced starting from the date of transition to IFRS, prospectively in relation to those transactions that meet the conditions for its application provided for in IAS (IAS) 39. Supporting documentation also cannot be created retrospectively
3. Estimated estimates	The use of retrospective judgment to effect a revision of estimates is prohibited. Estimates made by the company in accordance with previously used national rules may be revised only to correct confirmed errors or in connection with a change in accounting policy

IFRS (IFRS) 1 requires disclosures about the impact of the transition to IFRSs.

The first IFRS financial statements should include a reconciliation of the following:

• - capital under the previously used national rules and capital at the date of transition to IFRS and at the end of the last period presented in the latest financial statements of the company under national rules;
• - net profit according to previously used national rules and net profit according to IFRS for the last period, reflected in the latest financial statements of the company according to national rules.

The reconciliation should contain sufficient information for the users of the financial statements to understand:

• 1) significant adjustments to the items of the balance sheet and profit and loss statement;
• 2) adjustments due to changes in accounting policies;
• 3) corrections of errors identified during the transition to IFRS.

Disclosure according to IAS (IAS) 36 is given in the case when

an impairment loss is recognized in the opening IFRS balance sheet.

The total fair value and the total adjustment to the previously used carrying amount are disclosed line by line. The first IFRS financial statements must also include comparative information prepared in accordance with IFRS for at least one year. In Russia, there is no standard governing the first application of national accounting standards - PBU.

Practical aspects of IFRS 1 “First-time adoption of IFRS”

Application examples of IFRS 1 First-time adoption of IFRS

1) EXAMPLE - opening IFRS balance sheet

2) EXAMPLE - Previously applicable national regulations

You have previously reported in accordance with Russian Accounting Standards.

Russian accounting standards are your previously applied national rules.

3) EXAMPLE - reporting date

4) EXAMPLE - interim financial statements

You are also preparing interim financial statements for January - June 2XX8. It contains a clear and unconditional statement of compliance with IFRS.

You apply IFRS 1 in preparing your interim financial statements.

5) EXAMPLE - for external use only

You have chosen to publish 2XX8 IFRS statements containing comparative data for 2XX3-2XX7. It contains a clear and unconditional statement of compliance with IFRS. No interim financial statements have been prepared.

The figures for 2XX3-2XX7 are derived from management accounts reviewed only by your directors.

Your first IFRS financial statements are for 2XX8.

6) EXAMPLE - accounting policies

Your accounting policies in all years must be consistent with those applicable to 2XX8.

7) EXAMPLE - adjustments arising from events and transactions prior to the date of transition to IFRS

In accordance with previously applicable national regulations, you have recognized intangible assets that are not recognized under IFRS.

Corresponding adjustments are recorded in retained earnings and disclosed.

8) EXAMPLE - fair value according to previously applicable national regulations - 1

In accordance with previously applicable national regulations, you have revalued your property using an independent appraisal. You have been informed that the values \u200b\u200bof the indicators at the date of transition to IFRS have not changed significantly.

You may use these valuation values \u200b\u200bas the estimated cost under IFRS.

9) EXAMPLE - a company first adopts IFRS later than its subsidiary

In 2XX7, your subsidiary first adopted IFRS. In 2XX8, your company first adopted IFRS.

In preparing the consolidated financial statements, you use the same values \u200b\u200bof the carrying amounts of assets and liabilities as the subsidiary (in 2XX8), except for the consolidation adjustments required in preparing the consolidated financial statements.

The date of transition of the company to IFRS is 1 January 2XX4, and the new information dated 15 July 2XX4 requires a revision of the estimate of the provision for bad debts, made in accordance with the previously applicable national rules as of 31 December 2XX3.

The company should not reflect this new information in its opening IFRS balance sheet (unless estimates need to be adjusted due to differences in accounting policies, or there are cases where the fact of an error can be objectively confirmed).

On the contrary, the company must reflect this new information in its income statement (or, if necessary, other changes in equity) for the year ended December 31, 2XX4.

In June 2003, the IASB Board published a new IFRS 1 First-time Adoption of IFRSs. It replaces SIC 8 “First time adoption of IFRS as primary basis of accounting”. Business entities are required to apply this standard when IFRS-compliant financial statements are first presented for a period after 01/01/2004. Earlier use of IFRS 1 is also approved.

Why IFRS 1 needs to be adopted?

1. Formation of financial statements according to the predictions of SIC 8 “Application of IFRS for the first time as the main basis of accounting” with regard to retrospective application of all international standards is associated with unreasonably high costs.
2. The number of companies that are implementing IFRS is steadily increasing. Accordingly, it became necessary to meet the need for a more detailed indication of information on the procedure for the formation of financial documentation in accordance with international standards.

Differences between IFRS 1 "First-time adoption of IFRS" from SIC 8 "First-time adoption of IFRS as the main accounting basis"

This standard is more convenient to use and brings more efficiency from its use in the preparation of financial statements in accordance with international standards. Benefits:

1. IFRS 1 First-time Adoption of IFRSs permits voluntary and mandatory exemptions from retrospective application of predictions from international standards for all users of financial documents.
2. This document provides clarifications on the organization's application of the most recent version of International Financial Reporting Standards for all information in financial documents, including comparative ones.
3. This standard establishes additional financial disclosure conditions that disclose the implications of implementation.

Objective of IFRS 1

The objective is to ensure that an entity presents high quality information in its first IFRS financial statements that:

• transparent to users and allows comparisons across all periods presented;
• is the starting point for subsequent accounting in accordance with IFRS (provides an acceptable starting point between national standards and IFRS);
• can be obtained at a fairly adequate cost in relation to the benefits obtained (training costs do not exceed the benefits to the user).

Fundamentals of IFRS 1

1. Application of all requirements of all standards and interpretations in case of direct and unconditional declaration in accordance with IFRS.
2. Recognition, write-off, re-qualification and revaluation of all assets and liabilities in accordance with the requirements of IFRS when forming the opening balance sheet in accordance with IFRS.
3. Retrospective application of IFRS requirements in all cases, except for the exceptions contained in the standard.
4. Prospective application of IFRS requirements in rare cases of high costs, inadequate benefits, and in cases of the need for ex post facto judgment.
5. Disclosure of the effects of changes in financial position, financial performance and cash flows resulting from the application of the new standards.

When is an entity required to apply IFRS 1?

An entity shall apply the standard if the compiled financial documentation for the previous most recent period:

• was compiled in accordance with the requirements of national standards that differ from international ones;
• meets all the conditions for applying IFRS, but without an explicit and unquestioning statement about this fact;
• was formed with a specific statement of some similarity with international standards;
• was formed according to national and some (but not all) international standards;
• met national standards and was a comparison of some indicators in similar ones that were obtained using IFRS.

IFRS 1 also applies if an entity:

• formed financial documentation in accordance with IFRS for internal accounting, without showing it to managers and other users;
• did not compile a detailed set of financial documents in accordance with the requirements of international standards (for consolidation purposes);
• did not form financial statements for previous periods.

IFRS 1 does not apply

If the company has demonstrated financial statements in earlier periods that clearly and unconditionally comply with international standards and:

1. decided not to provide financial documentation to national standards;
2. decided to remove the specific requirement in reporting that national SBUs were in compliance with previously applied international standards;
3. the auditor's report does not contain the auditor's agreement with such a statement.

If you are just going to study IFRS, you are welcome! Our course

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Test

By discipline: "International Financial Reporting Standards"

First-time adoption of IFRS

Executor: Nekrasova E.V.

5th year student of the Faculty of Economics

Specialty: "finance and credit"

First-time adoption of IFRS

Introduction

International Financial Reporting Standards (IFRS) are rules that establish the requirements for the recognition, measurement and disclosure of financial and business transactions for the preparation of financial statements of companies around the world. Financial reporting standards ensure the comparability of accounting documents between companies on a global scale, and are also a condition for the availability of reporting information to external users.

Before the advent of International Financial Reporting Standards, there were two accounting models in the world - continental and Anglo-Saxon. In the last decade of the twentieth century, there has been a convergence of these accounting systems. Moreover, both the continental and the Anglo-Saxon models are now "moving" towards the International Financial Reporting Standards.

International accounting standards allow not only to reduce the costs of companies for the preparation of their reporting (especially in the context of the consolidation of financial statements of enterprises operating in different countries), but also to reduce the cost of raising capital. It is known that the market price of capital is determined by two main factors: long-term returns and risks. Some of the risks are indeed characteristic of the activities of the companies themselves, but there are also those that are caused by a lack of information, lack of accurate information about the return on investment. One of the reasons for the lack of information is the lack of standardized financial reporting, which, while preserving capital, actually increases it. This is because investors are willing to receive slightly lower returns, knowing that greater disclosure of information reduces their risks.

These advantages are largely due to the desire of various countries to use the standards in national accounting practice.

The UN Center for Transnational Corporations started working on IFRS. For the development of global economic relations, a universal language of communication was needed. Later, in 1973, the International Financial Reporting Standards Committee (IASC) was established in London. Since 1983, all professional organizations that are members of the International Federation of Accountants have become members of the IASB. The purpose of the IASB is to harmonize the accounting principles used by business entities around the world to prepare financial statements.

It should be noted that developing countries that are dependent on foreign capital use fully international standards. Countries with developed market economies with established national accounting traditions prefer internal standards that are developed taking into account the basic principles of IFRS.

1. Reasons for developing IFRS 1 "First-time adoption of international financial reporting standards"

Due to the difficulties of implementation and understanding of IFRS, the Management Board of the IASB has developed and in 2003 adopted IFRS 1 “First Implementation of International Financial Reporting Standards”. This standard is now used alongside IAS 1 Presentation of Financial Statements. The reasons for its development, in our opinion, are the following:

IFRS 1 “First Adoption of International Financial Reporting Standards” entered into force on January 1, 2004. Thus, an organization that has decided to apply IFRS for financial reporting uses it when generating data on the results of its work for 2005. provides detailed guidance that it should be used by entities preparing financial statements for a period beginning on the effective date of IFRS 1. In addition, this standard is guided if the entity decides to use International Standards as the main basis reporting later than the effective date of the standard. If a company prepared financial statements for internal use and did not present them to external consumers, then the provisions and requirements of this standard should also be implemented when preparing financial statements that comply with international principles.

IFRS 1 “First-time Adoption of International Financial Reporting Standards” can be used to its fullest when an entity has prepared statements using separate standards in previous reporting periods. It can also be used by organizations that previously prepared reporting in accordance with the fundamental principles of international standards, but despite the fact that it was used by external and internal users, it was impossible to unequivocally state that all IFRS requirements were met. In addition, the standard should be used by organizations that previously prepared financial statements in accordance with national requirements and national standards that partially comply with IFRS. At the same time, there was no statement that this organization presented statements that fully comply with the provisions of IFRS.

Thus, the provisions of IFRS 1 “First-time Adoption of International Financial Reporting Standards” indicate that first-time adopters of IFRS are those that for the first time present useful, reliable and reliable information in financial statements that fully complies with all IFRS requirements.

However, IFRS 1 should not be applied when the entity has performed the following work in the past:
1. Prepared financial statements in accordance with the requirements of national standards and IFRS and declared in the statements that it had formed its data in full compliance with international standards.

2. Has presented financial statements in accordance with the requirements of national standards, while declaring that such statements fully comply with IFRS.

3. Presented financial statements prepared in accordance with IFRS, indicating that they fully comply with international standards, although the auditors in the auditor's report expressed doubts in the form of a clause.

2 Organizing the first application of IFRS 1

The main objective of IFRS 1 is to prepare the first financial statements for the year, as well as interim statements within the financial year, containing high-quality information about the organization that meets the following requirements:

When preparing financial statements for the first time using the provisions of IFRS 1 "First-time Adoption of International Financial Reporting Standards", an entity must consider a number of mandatory requirements. First, when forming indicators of financial statements, the transitional provisions contained in other standards should not be used. Second, given that IFRS 1 proposes nine exemptions that can be implemented in the preparation of financial statements, it is imperative to comply with three of them, and six others are voluntary.

In order for the data of the previous reporting period (usually the financial year) to be presented in the financial statements in accordance with IFRS, it is necessary to carry out work to recalculate the information previously provided by the organization in the statements compiled in accordance with national rules and requirements. These data should be comparable with the reporting indicators obtained taking into account international methodological approaches, including those contained in IFRS 1. Therefore, despite some individual simplifications of the standard on the first application of IFRS, the process of transition to IFRS and the preparation of the first reporting is difficult ... However, when an entity has decided to transition to IFRS, or if the transition to international standards is a prerequisite, the fulfillment of which will allow solving important strategic objectives, it is necessary, according to IFRS 1, to fulfill the following conditions:

-	determine which financial statements of the company will be the first in accordance with IFRS;
-	prepare an opening IFRS balance sheet at the date of transition;
-	select an accounting policy in accordance with IFRS and apply it retrospectively for all periods presented in the first IFRS financial statements;
-	decide to apply any of the six possible voluntary exemptions to exempt from retrospective application of the standards;
-	apply three mandatory exemptions when retrospective application of standards is not permitted;
-	disclose in the financial statements detailed information explaining the specifics of the company's transition to IFRS.

In general, the date of transition to IFRS is the date on which comparative data for the previous or several previous reporting periods will be disclosed in the financial statements. For example, if an entity, preparing financial statements in accordance with IFRS, presents comparative figures for 2004, then the date of transition to IFRS is January 1, 2004. When such data are also presented for 2003, the transition date is January 1, 2003 g.