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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.

Published December 2003. Effective 1 January 2005.

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How standards trackers work

Financial Reporting Faculty members get full access. Login to get the version of the standard relevant to specific time periods via eIFRS.

ICAEW members and non-members can view a brief synopsis, amendments and details of current proposals.

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

Which version of the standard?

'Which version of the standard?' is only available to members of the Financial Reporting Faculty. Please note that to access electronic versions of IFRS through the links in these standard trackers you need to have first logged into eIFRS.

Annual period starts Effective version of standard Notes on amendments
On or after 1 January 2023 IAS 8 2021 Required Standards and Definition of Accounting Estimates* Includes amendments 1,2,3 and 4*
1 January 2020 – 31 December 2022 IAS 8 2020 Required Standards Includes amendments 1–3.
1 January 2018 – 31 December 2019 IAS 8 2018 Required Standards Includes amendment 1.

*Not UK endorsed as at 23 June 2021. Read more on UK endorsement of IFRS standards. Not EU endorsed as at 23 June 2021. Read more on EU endorsement of IFRS standards.

The Required Standards book for a particular year assumes that there is no early application of issued but not yet effective IFRSs; The Issued Standards book assumes early application of all issued IFRSs.

For the latest version of the standard, and where the amendments are to be adopted early, refer to IAS 8 2021 Required Standards and Definition of Accounting Estimates.

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.

1. IFRS 9 Financial Instruments amendment to IAS 8

Effective for annual periods beginning on or after 1 January 2018. Earlier application is permitted.

The issue of IFRS 9 amends IAS 8 to delete an example of a prior period error relating to an item classified in accordance with IAS 39.

2. Amendments to References to the Conceptual Framework in IFRS Standards – amendment to IAS 8

Effective for annual periods beginning on or after 1 January 2020. Earlier application is permitted, if at the same time an entity also applies the amendments to other IFRS Standards.

IAS 8 is amended to refer to the 2018 Conceptual Framework rather than the Framework in respect of definitions of items, recognition criteria and measurement concepts.

3 Definition of Material amendments to IAS 8

To be applied to annual periods beginning on or after 1 January 2020. Earlier application is permitted.

The definition of material is amended to be that given in IAS 1 (as amended):

Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.

4. Definition of Accounting Estimates*

Effective for annual periods beginning on or after 1 January 2023. Earlier application is permitted. 

IAS 8 is amended to:

  • Replace the definition of a change in accounting estimate with a definition of accounting estimates, being ‘monetary amounts in financial statements that are subject to measurement uncertainty’.
  • Include specific examples of accounting estimates.
  • Require that measurement techniques and inputs are used to develop accounting estimates.
  • Clarify that the effect on an accounting estimate of a change in a measurement technique or input is itself an accounting estimate (unless it results from the correction of a prior period error).

Examples of the application of the definition of accounting estimates are also added to the guidance that accompanies the Standard.

*Not UK endorsed as at 23 June 2021. Read more on UK endorsement of IFRS standards. Not EU endorsed as at 23 June 2021. Read more on EU endorsement of IFRS standards.

The following interpretations refer to IAS 8

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

UK reduced disclosures

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

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

Disclosure exemptions

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

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This page was last updated 23 June 2021