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Wiley IFRS: Practical Implementation Guide and Workbook, 3rd Edition by Liesel Knorr, Graham Holt, Abbas A. Mirza

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Chapter 32
FIRST-TIME ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS 1)

BACKGROUND

When an entity that reports under an accounting framework other than the International Financial Reporting Standards (IFRS)—say, its own set of national accounting standards—decides to change to IFRS, it has to comply with certain requirements (prescribed by IFRS) on conversion to IFRS; these requirements are outlined in IFRS 1, First-Time Adoption of IFRS. This IASB standard has gained considerable importance in recent years due to the phenomenal popularity of IFRS globally. Since the IFRS regime makes it incumbent upon all new adherents to IFRS to compulsorily pass the “IFRS 1 test” on conversion to IFRS, this standard is becoming more important by the day as more and more countries of the world are adopting IFRS as their national accounting standards.
Michel Prada, former chairman of the Technical committee of IOSCO, in his keynote address at a round table on global accounting convergence sponsored by the Financial Stability Forum and held in Paris in February 2006, had made the following interesting observations about the global acceptance of IFRS vis-à-vis other recognized international standards such as US GAAP (generally accepted accounting principles):
1. Out of a worldwide market capitalization totaling over 36 trillion US dollars at the end of 2005, 11 trillion US dollars correspond to markets where IFRS are either required or permitted, and 17 trillion US dollars to markets ...

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