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IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors

IAS 8 prescribes criteria for the selection of accounting policies. It also clarifies when a change in accounting policy is acceptable and provides guidance on the accounting treatment of such changes, as well as changes in accounting estimates and errors.

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Summary

  • Accounting policies should be determined by reference to the relevant IFRS.
  • If there is no relevant IFRS, management should use judgement to select a policy which results in reliable and relevant financial information.
  • A change in an accounting policy is permitted only where it is required by an IFRS or it results in more relevant and reliable information.
  • Changes in accounting policy should be applied retrospectively.
  • Changes in accounting estimate should be applied prospectively.
  • Errors should be corrected retrospectively.

Current proposals

  • ED/2019/7 General Presentation and Disclosures

    ED/2019/7 General Presentation and Disclosures was issued in December 2019. This is the exposure draft of a proposed new standard that would replace IAS 1. Consequential amendments to IAS 8 are proposed including:

    • Changing the name of IAS 8 to Basis of Preparation, Accounting Policies, Changes in Accounting Estimates and Errors and making changes to the Objective and scope paragraphs of the standard to reflect this.
    • Moving the paragraphs on general features of financial statements that are currently within IAS 1 (paragraphs 15 – 28) to IAS 8.
    • Moving the paragraphs on disclosure of accounting policies that are currently within IAS 1 (paragraphs 117 – 133) to IAS 8.

Recent amendments

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These resources are available exclusively to Corporate Reporting Faculty subscribers, ICAEW members and students.

Related IFRIC interpretations

UK reduced disclosures – FRS 101

UK qualifying parents and subsidiaries can take advantage of FRS 101 Reduced Disclosure Framework. Our FRS 101 page gives more information on which entities qualify and the criteria to be met.

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These resources are available exclusively to Corporate Reporting Faculty subscribers, ICAEW members and students.

ICAEW factsheets and guides

The Corporate Reporting Faculty's annual IFRS factsheets provide a more detailed discussion of recent IFRS amendments.

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