IFRS for SMEs Module 35: A Practical Guide to First-Time Adoption
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Module 35 explains how a small or medium-sized entity transitions to the IFRS for SMEs Accounting Standard for the first time.
It can be viewed as a step-by-step guide for moving from previous accounting requirements—such as local accounting rules or full IFRS—to the IFRS for SMEs framework.
In simple terms, it answers the following question:
If an entity adopts a new accounting framework, how can it make the transition in a fair, orderly and practical manner?
Why Is the Transition Necessary?
Different countries and entities may apply different accounting frameworks. When an SME adopts IFRS for SMEs, investors, lenders and other financial statement users can better understand and compare its financial information.
However, changing accounting frameworks all at once can be challenging. Module 35 is intended to make the first-time transition more practical and manageable.
Who Is a First-Time Adopter?
An entity is a first-time adopter when it makes an explicit and unreserved statement in its financial statements that it complies with the IFRS for SMEs Accounting Standard for the first time.
This may include an entity that:
Has never prepared financial statements before;
Previously applied local accounting requirements; or
Previously applied full IFRS but is now moving to IFRS for SMEs.
An entity cannot selectively combine requirements from different frameworks. Once it adopts IFRS for SMEs, it must apply the framework in its entirety, subject to the relevant transition requirements, exemptions and exceptions.
What Is the Date of Transition?
The date of transition is the starting point for applying IFRS for SMEs.
It is the beginning of the earliest period for which the entity presents comparative information under the new framework.
At this date, the entity adjusts its:
Assets;
Liabilities; and
Equity,
so that they comply with IFRS for SMEs.
The Core Principle
The core principle is to prepare the financial statements as if the entity had always applied IFRS for SMEs, subject to the practical exemptions and mandatory exceptions provided under Module 35.
Although accounting requirements would normally require full retrospective application, Module 35:
Requires certain provisions to be applied strictly;
Allows optional exemptions to reduce cost and effort; and
Helps balance the quality of financial information with the resources available to SMEs.
What Does Module 35 Cover?
Module 35 helps entities to:
Determine whether they are first-time adopters;
Identify the correct date of transition;
Select and apply accounting policies appropriately;
Adjust opening balances;
Understand what is required, permitted or prohibited; and
Explain the transition clearly in the financial statement disclosures.
It also highlights areas requiring significant judgement and provides relevant examples and case studies.
Practical Guidance for Accountants
Accountants assisting with a first-time adoption should:
Confirm early whether the client is a first-time adopter;
Identify the correct date of transition, as an error may affect the entire transition process;
Review previous accounting policies carefully;
Use available exemptions thoughtfully rather than automatically;
Maintain clear documentation of significant judgements and estimates; and
Remember that transition disclosures are as important as the numbers themselves.
The goal is not to achieve perfection at any cost. The objective is to provide useful, understandable and reliable financial information at a reasonable cost.
Module 35 helps SMEs take their first step towards IFRS for SMEs in a structured, practical and cost-conscious manner.
IFRS for SMEs 第 35 章：首次采用的实务指南
IFRS for SMEs 第 35 章说明中小型企业第一次采用**中小企业国际财务报告准则（IFRS for SMEs Accounting Standard）**时，应如何进行转换。
它可以被理解为一份逐步说明企业如何从原有会计要求，例如本地会计准则或完整 IFRS，转换至 IFRS for SMEs 的实务指南。
简单来说，它回答的是：
如果企业采用新的会计报告框架，应如何以公平、有序及实际可行的方式完成转换？
为什么需要进行转换？
不同国家及企业可能采用不同的会计报告框架。当中小型企业采用 IFRS for SMEs 后，投资者、贷款人及其他财务报表使用者将能够更清楚地了解及比较企业的财务资料。
