The Handbook to IFRS Transition and to IFRS U.S. GAAP Dual Reporting

2.3 RATIONALE OF IFRS 1

2.3.1 First-Time Adoption of a Comprehensive Basis of Accounting

Essentially, IFRS 1 treats the first-time adoption of a comprehensive basis of accounting with reference to IFRSs. It is a change in accounting basis rather than an accounting change.2

Comment: U.S. GAAP has no similar guidance on its first-time adoption. Under FIN 40, an entity that describes its financial statements as prepared in conformity with U.S. generally accepted accounting principles must apply all relevant authoritative accounting pronouncements.3 This concept is similar to the explicit and unreserved statement of compliance to IFRSs (see Paragraph 2.7 following).

2.3.2 Derogation from the Basic Principle of Retrospective Application

Retrospective accounting for an involuntary change in accounting principles (i.e., mandated by authoritative pronouncements) is a general rule under both U.S. GAAP and IFRSs.

Comment: Under U.S. GAAP, this tenet is compelling except for certain FASB Staff Positions and, in general, for EITF Abstracts, unless the transitional provisions of a specific pronouncement state otherwise.4 For companies already applying IFRSs, IAS 8 requires retrospective application of involuntary changes in accounting policies for which a Standard or an Interpretation does not provide any transitional provision. This is subject to an impracticability exception that, contrary to the previous version of the standard, also holds when the retrospective application required ...