PRACTICAL ISSUES IN THE ADOPTION OF IFRS FOR INDIVIDUAL REPORTING PURPOSES IN HUNGARY

International Financial Reporting Standards (hereinafter referred to as IFRS) are the collection of accounting standards published by the International Accounting Standards Board (IASB) which enables the legislators to establish a framework for the individual financial reporting. Out of standards by IASB, the application of standards adopted by the EU is mandatory for Member States. The EU introduces its supported standards in its legal system through regulations. As a result of the harmonization of law, Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19th July 2002 on the application of international accounting standards has been in force since 14th September 2002. The Regulation required all companies listed on the European Union's stock exchange to prepare their consolidated financial statements as of 1st January 2005 in accordance with the International Financial Reporting Standards. According to the EU’s standpoint, this requirement increases transparency and comparability of corporate financial statements and, as a result, increases market efficiency in the EU, reduces capital cost to companies, thereby improves competitiveness and increases growth (1606/2002 /EC). Under the Regulation, in addition to binding rules, Member States may allow or require the application of IFRSs adopted by the European Union in the compilation of individual or consolidated financial statements of unlisted companies in the EU or in the compilation of individual accounts of EU listed companies. Thus, in recent years, more and more Member States have permitted or have made compulsory the preparation and publication of individual financial statements based on IFRS principles. Hungary tries to enlarge the business scope the obligation and possibility of the IFRS adoption for individual reporting purposes. In this article we would like to represent the process of this adoption under Hungarian conditions.