IAS 8-Accounting Policies, Changes in Accounting Estimates and Errors (Summary)
Summary of IAS 8-Accounting Policies, Changes in Accounting Estimates and Errors
IAS 8 prescribes the criteria for selecting and changing accounting policies, together with the accounting treatment and disclosure of changes in accounting policies, changes in accounting estimates and corrections of errors. Accounting policies are the specific principles, bases, conventions, rules and practices applied by an entity in preparing and presenting financial statements. When an IFRS Standard or IFRS Interpretation specifically applies to a transaction, other event or condition, an entity must apply that Standard.
In the absence of an IFRS Standard that specifically applies to a transaction, other event or condition, management uses its judgement in developing and applying an accounting policy that results in information that is relevant and reliable. In making that judgement management refers to the following sources in descending order:
- the requirements and guidance in IFRS Standards dealing with similar and related issues; and
- the definitions, recognition criteria and measurement concepts for assets, liabilities, income and expenses in the Conceptual Framework.
Changes in an accounting policy are applied retrospectively unless this is impracticable or unless another IFRS Standard sets specific transitional provisions.
Changes in accounting estimates result from new information or new developments and, accordingly, are not corrections of errors. The effect of a change in an accounting estimate is recognised prospectively by including it in profit or loss in:
- the period of the change, if the change affects that period only; or
- the period of the change and future periods, if the change affects both.
Prior period errors are omissions from, and misstatements in, the entityβs financial statements for one or more prior periods arising from a failure to use, or misuse of, available reliable information. Unless it is impracticable to determine the effects of the error, an entity corrects material prior period errors retrospectively by restating the comparative amounts for the prior period(s) presented in which the error occurred.
Source:
- Phnom Penh HR
- ifrs.org /issued-standards/list-of-standards/ias-8-accounting-policies-changes-in-accounting-estimates-and-errors/