The development of the European Union as an economic and trade entity and the globalization trend created a need for standard international financial reporting. All public companies in EU countries adopted financial reporting according to IFRS already in 2005.
This is a growing trend and more than 100 countries have already adopted the IFRS standards.

Advantages of financial reporting according to IFRS standards
A better comparison of financial data between Israeli and foreign companies
Better access to international sources of financing
Israeli companies can more easily perform an IPO on Foreign Stock Exchanges and vice versa.  The transition to international accounting standards is not only a pure technical and ccounting transition but reflects more a change in the fundamentals of accounting. A clear example of that is the measurement of assets and obligations according to fair values and not according to historical cost. Other important changes are : recognition of intangible assets in acquisition of companies and in business combinations.

Accounting standard number 29
The Israeli Institute for Accounting Standards adopted in July 2006 the standard number 29 regarding the adoption of International Financial Reporting Standards (IFRS). This Standard states that all companies listed on Tel Aviv Stock Exchange and under the Israeli Securities Law will need to publish their financial reports starting from January 1st 2008 according to the International Standards (IFRS) and to comply with the publications issued by the IAS (International Accounting Standards).

The Standard number 29 specifies that a company which adopts the IFRS standards from January 1st 2008 is required to prepare the opening statements on January 1st 2007 already based on IFRS. The transition towards IFRS will be made according to the instructions detailed in IFRS 1. IFRS 1 sets up rules to accomplish the transition from financial reporting according to local accounting rules to financial reporting according to international accounting standards. IFRS 1 specifies that all international accounting standards should be adopted in advance in the opening statements of January 1st 2007. The standard number 29 allows for early implementation (prior to January 1st 2008) for financial reports published after July 31st 2006.

 The standard number 29 allows companies that are not publicly traded and that wish to report according to international standards to do so for the financial reports published after July 31st 2006. A new draft of IFRS standard was published in January 2007. It describes special and shorter rules applicable for small and medium businesses that are not listed on any Stock Exchange. As soon as the new international standards become applicable, the local standards will be replaced.

Summary of published IFRS standards

IFRS 1- Adoption of first part of the International Accounting Standards

IFRS 2- Payment based on shares

IFRS 3- Business combination

IFRS 4- Insurance contracts

IFRS 5- Non-current Assets Held for Sale and Discontinued Operations

IFRS 6- Exploration for and Evaluation of Mineral Resources (and amendments related to IFRS 1 and IAS 16 and 18)

IFRS 7- Financial Instruments: disclosures (and amendment to IAS 1 to add disclosures related to capital). In this topic, there are 41 International Accounting Standards (IAS).

 Read our presentation of IFRS for SMEs