preface

6. ACCOUNTING AND AUDITING
PERSPECTIVES
6.1. BACKGROUND
Generally Accepted Accounting Principles in Israel (Israeli GAAP) and
Generally Accepted Auditing Standards in Israel (Israeli GAAS) are basically
similar to the corresponding principles and standards of the International
GAAP and GAAS. This chapter reviews Israeli GAAP and GAAS, to enable
the reader to take these principles and standards into consideration when
reading and evaluating audited financial statements prepared in accordance
with Israeli GAAP.
Commencing January 1, 2008 the accounting principles applicable to Israeli
companies depend on the statutory position of each organization (banks and
credit card companies apply different GAAP - see Section 6.3 below). Non
listed companies continue to apply Israeli GAAP. However, the accounting
framework for listed companies has changed, requiring mandatory application
of IFRS from 2008, or a choice of early application of IFRS.
New IFRS and Interpretations have been adopted in Israel as published by the
IASB, without an endorsement process. This unique approach of mandatory
application of IFRS "as is" without exceptions, exposes listed companies to all
frequent changes published by the IASB. By contrast, EU listed companies
must wait till the end of an endorsement process conducted by the EU after
consulting with the EFRAG (European Financial Reporting Advisory Group).
Since the adoption of IFRS, the Israeli Accounting Standards Board ('the
Board') has been required to examine whether the accounting treatment chosen
by first time adopters is in line with IFRS. In addition, the Board had
considered certain accounting issues arising due to IFRSs adoption in Israel. The
Board examined and concluded upon the following issues:
IAS 1 (1) , requirement to present additional statement of financial position
as of the beginning of the earliest comparative period when there is a
change in accounting policy, restatement or reclassification: In December
2010 the Board clarified that an entity applying an accounting principle
retrospectively, restating its financial statements or reclassifying items therein,
shall present an opening statement of financial position as at the beginning of
(1) IAS 1 - Presentation of financial statements
BDO Israel
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