IFRS 1 requires an entity that is adopting IFRS Standards for the first time to prepare a complete set of financial statements covering its first IFRS reporting period and the preceding year.
The entity uses the same accounting policies throughout all periods presented in its first IFRS financial statements. Those accounting policies must comply with each Standard effective at the end of its first IFRS reporting period.
IFRS 1 provides limited exemptions from the requirement to restate prior periods in specified areas in which the cost of complying with them would be likely to exceed the benefits to users of financial statements.
IFRS 1 also prohibits retrospective application of IFRS Standards in some areas, particularly when retrospective application would require judgements by management about past conditions after the outcome of a particular transaction is already known.
IFRS 1 requires disclosures that explain how the transition from previous GAAP to IFRS Standards affected the entity’s reported financial position, financial performance and cash flows.
In April 2001 the International Accounting Standards Board (Board) adopted SIC‑8 First-time Application of IASs as the Primary Basis of Accounting, which had been issued by the Standing Interpretations Committee of the International Accounting Standards Committee in July 1998.
In June 2003 the Board issued IFRS 1 First-time Adoption of International Financial Reporting Standards to replace SIC‑8. IAS 1 Presentation of Financial Statements (as revised in 2007) amended the terminology used throughout IFRS Standards, including IFRS 1.
The Board restructured IFRS 1 in November 2008. In December 2010 the Board amended IFRS 1 to reflect that a first-time adopter would restate past transactions from the date of transition to IFRS Standards instead of at 1 January 2004.
Since it was issued in 2003, IFRS 1 was amended to accommodate first-time adoption requirements resulting from new or amended Standards. Most recently, IFRS 1 was amended by IFRS 17 Insurance Contracts (issued May 2017), which added an exception to the retrospective application of IFRS 17 to require that first-time adopters apply the transition provisions in IFRS 17 to contracts within the scope of IFRS 17.
Other Standards have made minor amendments to IFRS 1. They include Improvements to IFRSs (issued May 2010), Revised IFRS 3 Business Combinations (issued January 2008), Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters (Amendments to IFRS 1) (issued December 2010), IFRS 10 Consolidated Financial Statements (issued May 2011), IFRS 11 Joint Arrangements (issued May 2011), IFRS 13 Fair Value Measurement (issued May 2011), IAS 19 Employee Benefits (issued June 2011), Presentation of Items of Other Comprehensive Income (Amendments to IAS 1) (issued June 2011), IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine (issued October 2011), Government Loans (issued March 2012), Annual Improvements to IFRSs 2009–2011 Cycle (issued May 2012), Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance (Amendments to IFRS 10, IFRS 11 and IFRS 12) (issued June 2012), Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27) (issued October 2012), IFRS 9 Financial Instruments (Hedge Accounting and amendments to IFRS 9, IFRS 7 and IAS 39) (issued November 2013), IFRS 14 Regulatory Deferral Accounts (issued January 2014), Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11) (issued May 2014), IFRS 15 Revenue from Contracts with Customers (issued May 2014), IFRS 9 Financial Instruments (issued July 2014), Equity Method in Separate Financial Statements (Amendments to IAS 27) (issued August 2014), IFRS 16 Leases (issued January 2016), Annual Improvements to IFRS Standards 2014–2016 Cycle (issued December 2016), which deleted several lapsed short-term exemptions, IFRIC 22 Foreign Currency Transactions and Advance Consideration (issued December 2016), IFRIC 23 Uncertainty over Income Tax Treatments (issued June 2017), Amendments to References to the Conceptual Framework in IFRS Standards (issued March 2018) and Annual Improvements to IFRS Standards 2018–2020 (issued May 2020).