Five questions on IFRS adoption

IFRSs are on their way to become the accounting language of choice around the world. Along with the success comes the challenge to maintain the integrity and consistency of the standards. Kenneth Creighton is the IASC Foundation’s senior manager responsible for the distribution of IFRSs. He answers crucial questions on IFRS adoption. Deciding to adopt IFRSs - what now? Before a country has taken the political decision to adopt IFRSs, the entity that has the legal authority for setting financial reporting standards needs to get in touch with the IASC Foundation. That authority might be a government department, the standard-setter or the accountancy institute, and it is important that we discuss the long-term and short-term implications of adoption. We will then enter into a legal contract with the adopting country to clarify all issues relating to the receipt and legal distribution of IFRSs.

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Although our policies are globally consistent, the contract in question can vary from country to country. This is because of the unique legislative and regulatory processes in each country. For example, in some countries the standards need to be printed in the official gazette as law, while in other countries the law simply refers to a handbook, containing the standards, which is sold commercially.

We respect each country’s process of setting the standards and we will tailor a contract to match the country’s unique system while we remain consistent on the issues of IFRS quality, consistency
and branding.

Each country’s adoption process might be different; nevertheless it is important that the quality and consistency of IFRSs is maintained. Investors, analysts, in fact anybody using IFRSs, rely on IFRSs being the same in every country that has adopted the standards.

If a country were to make changes to the standards, alter the name ‘IFRSs’, or not continue to adopt new standards, then this detracts from the benefits of having a single shared and consistent set of global standards.

The contractual relationship clarifies these copyright issues to ensure the integrity of the IFRSs.

What is the IASB policy on copyright?

Many countries need IFRSs without copyright so they can be made law and disseminated without restrictions.

In these cases the contract we sign waives the copyright on the core standards so that they can be freely distributed and redistributed by anyone. But the contract clarifies that no changes can be made to the standards and we do not waive copyright on the additional material, such as the Basis for Conclusions, Implementation Guidance and Illustrative Examples, that accompanies the standards.

Where can I get the additional material?

The additional material is published in our annual Bound Volume, which can be purchased through our Website and is available for subscribers of eIFRS, the online version of IFRSs. Often we have a licence arrangement in place with countries that have adopted or are adopting IFRSs and in this case the additional content is made available through local distributors.

What does IFRSs adoption cost?

The adoption of IFRSs is first and foremost a political decision of the adopting country. The true cost of adoption is dependent on the degree of change necessary to the country’s current system and culture of financial reporting.

However, contracting with the IASC Foundation is relatively low cost. The copyright waiver agreement does have a nominal fee which varies according to a country’s income level.