IFRS in your pocket |2021

Accounting Policies, Changes in Accounting

IAS 8
Estimates and Errors

Overview Prescribes the criteria for selecting and changing

accounting policies, together with the accounting
treatment and disclosure of changes in accounting
policies, changes in estimates and correction of
errors.
Selecting Entities must apply the Standards and
accounting Interpretations issued by the Board. In the absence
policies of a directly applicable IFRS Standard, entities must
look to the requirements in IFRS Standards that
deal with similar and related issues and, failing
that, to the Conceptual Framework. Entities may
also consider the most recent pronouncements
of other standard-setting bodies that use a similar
conceptual framework, other accounting literature
and accepted industry practice.
Changes in Accounting policies must be applied consistently
accounting to similar transactions. Voluntary changes can be
policies made only if the change results in reliable and more
relevant information.

When a change in accounting policy is required by

an IFRS Standard, the pronouncement’s transitional
requirements are followed. If the new requirement
is not yet mandatory, and the entity has not
early-applied the change, the entity must provide
information it knows, or can reasonably estimate,
about the possible effect that application will have
on its financial statements when it plans to apply the
new requirements.

If the entity makes a change voluntarily, the new

policy must be applied retrospectively and prior
periods are restated. The Standard provides
relief from retrospective application when it is
impracticable to determine period-specific effects.
Changes in Changes in accounting estimates (e.g. change
accounting in useful life of an asset) are accounted for
estimates prospectively, in the current year, or future years, or
both. The comparative information is not restated.
Prior period All material prior period errors are corrected by
errors restating comparative prior period amounts and,
if the error occurred before the earliest period
presented, by restating the opening statement of
financial position.

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