Effective dates and Transition Methods

Introduction and objective 

The Effective Dates and Transition Methods project was initiated by the IASB with the aim of gathering input from stakeholders on transitional provisions and dates of entry into force of new standards that will be published in 2011 in order to use this information to enable an impact analysis of the same and to prepare an implementation plan for these accounting standards, thereby assisting stakeholders to manage the cost and pace of change.
On 19 October 2010, the IASB issued a Request for Views on Effective Dates and Transition Methods, in consultation until 31 January 2011. The projects that the IASB identified are:

– Consolidation;
– Fair value measurement;
– Financial instruments (IFRS 9);
– Insurance contracts;
– Joint arrangements;
– Leases;
– Post-employment benefits – Defined benefit plans;
– Presentation of items of OCI;
– Revenue from contracts with customers.

Summary

The Request for Views mainly focuses on four areas:
- preparation for transition to the new standards: the IASB is trying to understand the nature of the efforts needed to implement and the time it takes for an appropriate transition to the new standards. The basic approach proposed by the IASB to adopt the new standards is to implement the provisions retrospectively, except in special situations;
- the dates of entry into force and application in advance: the IASB calls for input on how to implement the new accounting standards regarding the entry into force and whether to allow early application of the same. In particular, the IASB proposes two possible approaches, these are the single date approach, i.e. all the new principles should come into force on that date; or the sequential approach, i.e. each rule, or an appropriate set of principles, should enter into force on different dates covered in a specified time span;
- reflection on international convergence: i.e. assessments on whether to request the same date of entry into force and transitional arrangements for the same principles covered in the process of convergence between IFRSs and U.S. GAAP;
- reflection on how enterprises will adopt IFRSs in the coming years (first-time adopters). The IASB proposes the opportunity to advance implementation of the new standards or to delay the adoption of new standards, or only for some standards, for a period of time (e.g. two years). Some of the principles covered by the Request for Views are part of the process of convergence between IFRSs and U.S. GAAP. In this regard, we note that the FASB has also published a similar document (discussion paper), requesting comments on these topics.

For more information, please refer to the IASB website