# IFRS First-time Adoption Guidance and Compliance Statement ## Issue An entity has complied with all IFRS requirements in its financial statements except it has **never included an explicit statement of compliance with IFRS** in the notes. The question is whether such an entity is subject to the guidance for first-time adopters of IFRS. ## Authoritative Guidance ### IFRS 1, Paragraph 3 > "An entity shall apply this IFRS in its first IFRS financial statements and each interim financial report, if any, that it presents in accordance with IAS 34 Interim Financial Reporting for part of the period covered by its first IFRS financial statements." > > "An entity’s first IFRS financial statements are the first annual financial statements in which the entity adopts International Financial Reporting Standards (IFRSs), by an explicit and unreserved statement of compliance with IFRSs." ### IFRS 1, Paragraph 2 > "An entity shall apply this IFRS when it first adopts IFRSs by an explicit and unreserved statement in those financial statements of compliance with IFRSs." ### IAS 1, Paragraph 16 > "An entity whose financial statements comply with IFRSs shall make an explicit and unreserved statement of such compliance in the notes." ## Analysis - An entity is considered a **first-time adopter** when it presents, for the first time, financial statements with an explicit and unreserved statement of compliance with IFRSs. - Merely following IFRS recognition and measurement principles in previous financial statements is **not sufficient**. - If an entity has **never made an explicit and unreserved statement of compliance with IFRS** in its financial statements, it is treated as a **first-time adopter** under IFRS 1. ## Conclusion **Yes, the entity is subject to first-time adoption guidance.** - **Per IFRS 1, Paragraphs 2–3**: The absence of an explicit and unreserved statement of compliance means the entity has not previously presented IFRS financial statements, and thus must apply IFRS 1 for first-time adopters. --- **References:** - IFRS 1, paragraphs 2–3 - IAS 1, paragraph 16 --- **Sample Citation:** > No, the entity is not exempt from first-time adoption guidance. Per IFRS 1, paragraphs 2 and 3, an explicit and unreserved statement of compliance is required. Without this statement, the entity is a first-time adopter.