EFRAG completed its due process regarding the Amendments to IFRS 1 'Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters', and has submitted its Endorsement Advice Letter and Effects Study Report to the European Commission.
The objective of the Amendments is to introduce a new exemption in the scope of IFRS 1 First-time Adoption of International Reporting Standards. Entities that had been subject to severe hyperinflation are allowed to use fair value as the deemed cost of their assets and liabilities in their opening IFRS statement of financial position. In addition, the Amendments also replace the references to fixed dates in IFRS 1 with references to the date of transition.
The Amendments become effective for annual periods beginning on or after 1 July 2011.
The Amendments to IFRS 1 include consequential amendments to IFRS 9 Financial Instruments, which has not yet been endorsed in the EU. Therefore, those consequential amendments are not addressed in this endorsement advice and will be considered together with the related requirements in IFRS 9.
EFRAG has carried out an evaluation of the Amendments. As part of that process. EFRAG issued its initial assessment for public comment and, when finalising its advice and the content of this letter, it took the comments received in response into account. EFRAG's evaluation is based on input from standard-setters, market participants and other interested parties and its discussions of technical matters are open to the public.
EFRAG supports the Amendments and has concluded that they meet the requirements of the Regulation (EC) No 1606/2002 of the European Parliament and of the Council on the application of international accounting standards.
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© EFRAG - European Financial Reporting Advisory Group
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