IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors

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

Synopsis

• 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

• Read the unaccompanied version of IAS 8

The International Accounting Standards Board (IASB) provides free access to the consolidated unaccompanied international accounting standards for the current year through its website. Free registration is required.

This unaccompanied version does not include additional content that accompanies the full standard, such as illustrative examples, implementation guidance and bases for conclusions.

Which version of the standard?

Financial Reporting Faculty members who joined the faculty prior to 1 November 2022 have premium access to the consolidated edition of IFRS and amendments through the IASB's IFRS Standards Navigator service. Please log into IFRS Standards Navigator to access electronic versions of the standards through these links.

Please be aware that as part of the changes to ICAEW faculty membership, this service will be withdrawn after 31 December 2022.

Recent amendments

Full access to details of all the amendments is only available to Financial Reporting Faculty members. Find out how to join the faculty.

The following interpretations refer to IAS 8

• IFRIC 1 Existing Decommissioning, Restoration and Similar Liabilities
  Addresses accounting for a change in a provision that is included in the carrying amount of an item of PPE.

• IFRIC 5 Rights to Interests Arising from Decommissioning, Restoration and Environmental Rehabilitation Funds
  Provides guidance on how a contributor to a decommissioning fund should account for its interest in a fund.

• IFRIC 6 Liabilities Arising from Participating in a Specific Market – Waste Electrical and Electronic Equipment
  Clarifies when producers of electrical goods must recognise a liability under IAS 37 for the cost of managing waste electrical and electronic equipment.

• IFRIC 12 Service Concession Arrangements
  Accounting guidance for arrangements where a contract is granted for the supply of public services such as roads.

• IFRIC 14 IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction 
  Provides general guidance on how to assess the limit in IAS 19 on the amount of the surplus that can be recognised as an asset. Explains how the pensions asset or liability may be affected when there is a statutory or contractual minimum funding requirement.

• IFRIC 16 Hedges of a Net Investment in a Foreign Operation
  Provides guidance on what can be an eligible hedged risk, which entities may hold the hedging instrument and reclassification adjustments.

• IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments
  Addresses the accounting by an entity which issues equity instruments in order to settle, in full or part, a financial liability. 

• IFRIC 21 Levies
  Provides guidance on when to recognise a liability for a levy imposed by a government.

• IFRIC 22 Foreign Currency Transactions and Advance Consideration
  Clarifies the accounting treatment applicable to transactions that include the receipt or payment of foreign currency consideration in advance.

• IFRIC 23 Uncertainty over Income Tax Treatments
  Clarifies how to apply the recognition and measurement requirements of IAS 12 when there is uncertainty over income tax treatments.

• SIC 7 Introduction of the Euro
  The effective start of the EMU after the reporting date does not alter the requirements of IAS 21 at the reporting date.

• SIC 10 Government Assistance – No Specific Relation to Operating Activities
  Government assistance aimed at long-term support of business activities in certain regions or business sectors meets the IAS 20 definition of government grants.

• SIC 25 Income Taxes – Changes in the Tax Status of an Enterprise or its Shareholders
  Addresses the deferred tax consequences of changes in tax status of an enterprise or its shareholders.

Current proposals

1. 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 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
   • Read ED/2019/7 General Presentation and Disclosures

UK reduced disclosures – FRS 101

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

Amendments to the standard for FRS 101 preparers

There are no amendments to IAS 8 in order to comply with the Companies Act and related Regulation.

Disclosure exemptions for FRS 101 preparers

FRS 101 paragraph 8(i) states that a qualifying entity is exempt from the IAS 8 requirement to disclose details of a new IFRS which has been issued but is not yet effective and has not been applied by the entity.

IAS 8 paragraphs for which exemption is available: 30 and 31.

Other resources

Factsheets

• 2020 IFRS Accounts
  Provides more information on Definition of Material amendments to IAS 8
• 2022 IFRS Accounts
  Provides more information on Definition of Accounting Estimates

This page was last updated 30 August 2022.